MPC voted strongly against January rate cut

The Bank of England's Monetary Policy Committee (MPC) voted 8-1 in favour of holding the base rate of interest in January.

That fact has been revealed in the minutes from the meeting and highlighted the members' concerns about rising inflation.

However, most analysts predict that a reduction will be announced in February, although pressure to cut the rate by 0.5 percentage points will be resisted.

Howard Archer from Global Insight said that a cut will be announced next month and more will follow throughout 2008.

"We expect the Bank of England to trim interest rates by 25 basis points to 5.25 per cent in February unless there is a further sharp fall in equity prices and it becomes clear that the growth outlook is deteriorating sharply," he commented.

"We currently forecast interest rates to fall to 4.25 per cent by early 2009," continued Mr Archer.

The MPC cut the base rate in December by 0.25 percentage points, taking it down to 5.5 per cent.

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