GB: BoE MPC Minutes

Wed May 20 03:30:00 CDT 2015

Minutes of the BoE's May MPC meeting confirmed another widely expected unanimous decision to leave Bank Rate at 0.5 percent and QE at Stg375 billion. Two members, almost certainly Martin Weale and Ian McCafferty, thought that the case for a tightening was finely balanced but in general the minutes contained no surprises and are consistent with an unchanged Bank Rate through year-end.

Today's outcome was never really in doubt amidst signs of slowing economic growth (although the MPC expects the first quarter to be revised up from 0.3 percent to 0.5 percent) and an ongoing and substantial undershoot of the 2 percent inflation target. In fact, outside of a modest acceleration in wages, and even then only to a still historically low rate, and a bounce in house prices there has been little in the data for the MPC's hawks to get their claws into.

The committee clearly remains concerned by the persistent strength of the pound and sees net exports weighing on growth going forward due to the consequent loss of competitiveness. To this end, some verbal intervention aimed at weakening the exchange rate is very probable and current levels of the pound should be seen as an additional brake on any hike in Bank Rate.

The Monetary Policy Committee issues minutes of its meetings with a two week lag.

Investors who want a more detailed description of Bank of England opinions will generally read the minutes closely. The MPC may issue a statement after its monthly meeting but the minutes will be much more detailed. In particular they will reveal who voted for and against the Committee's decisions and provide a more detailed description of the MPC's thinking. As such, the minutes are a market mover as analysts parse each word looking for clues to future policy.