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20 Feb, 2008

Published: 12:30 Wednesday 20 February 2008
By: Nicholas Paler, Investment Reporter

Hopes for further cuts in interest rates were revived by the minutes from this month's Monetary Policy Committee (MPC) meeting.

The MPC voted 8-1 to cut rates by 25 basis points to 5.25%. The sole dissenting voice, that of David Blanchflower, argued for a greater reduction of 50 basis points to counter the risk of a very sharp slowdown in UK growth.

The MPC indicated inflation remains under control in the short term, increases hopes of more cuts in rates. 'The February Inflation Report, and its accompanying projections, would set out in detail the upside and downside risks to the outlook for inflation,' it said.

'The central projection suggested that there was most likely to be some spare capacity in the economy, even if interest rates followed the path implied by market yields, and that would therefore help to ensure inflation returned to the 2% target in the medium term.'

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