Bank committee split over rate rise

7:46pm Wednesday 20th August 2008

An interest rate increase was ruled out this month because of the risk that it might make the economic downturn "unnecessarily deep", the Bank of England revealed.

Monetary Policy Committee (MPC) member Tim Besley voted to increase the cost of borrowing by 0.25% to 5.25%, minutes of this month's meeting showed. It was the second month in a row he argued for a rate hike.

But seven members chose to keep the rate steady at 5%, saying that despite the fact that the economic outlook had continued to worsen, it was the best policy to bring inflation back to its 2% target.

The other committee member, David Blanchflower, voted for a rate cut.