Meeting dampens hopes of UK interest rate cut

Hopes of another interest rate cut next month were dampened today after Bank of England minutes showed inflation fears at the top of the agenda.

Policymakers on the Bank’s Monetary Policy Committee (MPC) voted 7-2 in favour of keeping rates on hold at 5.25% in March, records of their meeting two weeks ago revealed.

Despite fears over the UK economy, activity indicators pointed to “less of a slowdown than expected”, the minutes said.

The committee – which met before the latest bout of stock market turbulence - also expects inflation will rise strongly in coming months as higher household energy bills hit home.

The MPC cut rates in December and February but added that a move lower in March could send the signal that rate-setters were focused on risks to demand at the expense of their mandate to keep a lid on prices.