Environmental regulations increased energy prices, thereby driving up the October inflation figure, the Bank of England’s minutes revealed yesterday, as Bank rate-setters voted 8-1 against more quantitative easing (QE).
“The utility suppliers, as well as Ofgem, pointed to increases in network and distribution charges and the costs of complying with environmental legislation as a cause of the [energy] price increases,” the minutes read, citing these rises as one of the major reasons for higher inflation.
In turn the Bank’s monetary policy committee (MPC), which sets rates and QE policy, gave higher inflation as one of the main reasons as all but David Miles voted against expanding the asset purchase scheme.
MPC members also cited better-than-expected GDP figures, rising exports, improvements in the US and China, successful Eurozone debt sales and an improving credit climate in the UK as influential in making their decision, the minutes showed.
But the Bank’s agents’ summary of business conditions, also released yesterday, suggested the economy was still very fragile.
The committee also voted on further lowering the Bank’s base rate, again rejecting the proposal unanimously – after reconsidering the motion and concluding it could hit balance sheets.