MPC unanimous on rates freeze

THE BANK of England's monetary policy committee voted unanimously to freeze interest rates this month it emerged today.

The minutes of the rate-setting meeting held a fortnight ago revealed that the nine-strong MPC, chaired by Bank Governor Mervyn King, was united in electing to keep the cost of borrowing at a 48-year low of 3.5%.

The minutes said the arguments for a rate cut were 'not persuasive' while those for a rate rise were 'not convincing'.

Economist John Butler at HSBC said: 'This is a central bank that is prepared to act quickly, in either direction, depending on which of the key risks to growth materialise.'

However, it may be only a matter of time before rates will rise. 'The level of interest rates continued to imply that the policy stance was accommodating. At some stage, this expansionary stance would have to be moderated,' the minutes said.

A separate report showed public sector finances swung £6.2bn into the black in July due to seasonal inflows of income and corporation taxes and record VAT receipts.

FRANCE'S economy shrank by 0.3% in the second quarter in the latest example of Europe's malaise.