MPC minutes leave doves in charge

The minutes from the latest Monetary Policy Committee meeting show that the "doves" have retained a firm grip on the group, and indicate that it will take a significant jump in economic performance before a tougher monetary policy line is taken.

The MPC voted 8 to 1 in favour of retaining the base interest rate at 4%, saying that global economic recovery was still unclear.

Falling stockmarkets and signs of slowing growth in the US meant that a rate rise now could cause a significant shock for business and consumers.

Yet again it was deputy Bank of England governor Mervyn King who took the "hawkish" line and provided the singe vote in favour of raising rates.

He says that too much weight is being lent to the effects of falls in equity markets.

But the firm vote in favour of a softly-softly approach to rates means most economists now see an August rate rise as highly unlikely, while continued poor economic performance could put off a rise in September.

The vote seems to have had the desired effect on the stockmarket, where the FTSE 100 index moved up 76 points to 4,097 by midday.

Continued low interest rates mean companies find it cheaper to borrow money and consumers will be more willing to buy goods and services.

There has also been some positive earnings news from European and US blue-chip stocks in the past 24 hours, including the world's biggest car maker General Motors and communications equipment giant Motorola, which says sales of mobile phones grew more than expected.

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