Two Bank of England policymakers back rate rise, others firmly against

Minutes of the BoE Monetary Policy Committee’s September 3-4 meeting showed that external members Martin Weale and Ian McCafferty voted to raise interest rates to 0.75 per cent from their record-low 0.5 per cent.

But the other seven members of the MPC saw no need to rush into the first rate rise since 2007, citing increased signs of weakness in the eurozone as well as weaker domestic housing activity, manufacturing and exports.

The MPC said that it was concerned that temporary weakness in the eurozone could turn into a prolonged period, and revive worries about the solvency of some eurozone governments.

“This could damage confidence and disrupt financial markets, and, as a result, the downside risks to UK growth in the medium term had probably increased,” the MPC said.

The MPC made little mention of a referendum on Scottish independence, beyond noting that it had triggered some volatility in foreign exchange markets.

Instead, it was more struck by a “remarkable” lack of volatility in markets - particularly for crude oil - against a backdrop of increased tension in Ukraine and the Middle East.

Bank staff had revised up their forecast for third-quarter growth to 0.9 per cent - well above Britain’s average over the long run - but the MPC said they saw some signs of a slowdown in the fourth quarter.