23 Apr 2014
BoE Minutes: MPC voted unanimously to keep rates and QE steady
FXStreet (Łódź) - BoE Minutes from the MPC monetary policy meeting held on 9 April and released today reveal that the Committee voted unanimously in favor of maintaining the interest rate at 0.5% and the program of asset purchases steady at £375 billion, as widely expected.
The central bank suggested that the economic recovery in the UK was gaining momentum, with Q1 and Q2 growth seen around 1%. The MPC acknowledged the rise in real wages and incomes, but expressed concerns about the slack in the labor market. The BoE pointed to the widening of the UK current account and low inflation Eurozone as risks to the domestic recovery.
The MPC members' “considerable uncertainty” about the degree of economic slack in the UK and the “range of opinions” on the medium term inflation outlook, signaled in the minutes, “perhaps hints at a fragmentation of the consensus within the MPC that could prompt some members to contemplate voting for action in coming months if the data continues doing what it is doing,” in the opinion of James Knightley from ING.
According to the minutes, the MPC “agreed that neither of the price stability knockout conditions that would override the policy guidance provided in August 2013 had been breached; and the FPC had agreed that the financial stability knockout had not been breached.”
“With unemployment remaining above the 7% threshold, the Committee’s August 2013 policy guidance therefore remained in place and no member thought it appropriate to tighten, or to loosen, the stance of monetary policy at the current juncture.”
The central bank suggested that the economic recovery in the UK was gaining momentum, with Q1 and Q2 growth seen around 1%. The MPC acknowledged the rise in real wages and incomes, but expressed concerns about the slack in the labor market. The BoE pointed to the widening of the UK current account and low inflation Eurozone as risks to the domestic recovery.
The MPC members' “considerable uncertainty” about the degree of economic slack in the UK and the “range of opinions” on the medium term inflation outlook, signaled in the minutes, “perhaps hints at a fragmentation of the consensus within the MPC that could prompt some members to contemplate voting for action in coming months if the data continues doing what it is doing,” in the opinion of James Knightley from ING.
According to the minutes, the MPC “agreed that neither of the price stability knockout conditions that would override the policy guidance provided in August 2013 had been breached; and the FPC had agreed that the financial stability knockout had not been breached.”
“With unemployment remaining above the 7% threshold, the Committee’s August 2013 policy guidance therefore remained in place and no member thought it appropriate to tighten, or to loosen, the stance of monetary policy at the current juncture.”