GB: BoE MPC Minutes

Wed Jun 17 03:30:00 CDT 2015

Minutes of the BoE's June MPC meeting confirmed the expected unanimous vote to leave Bank Rate at 0.5 percent and QE at Stg375 billion.

However, also as anticipated, two members (almost inevitably Weale and McCafferty) again suggested that the case for a tightening was finely balanced.

The minutes indicated that in general constraints on growth were seen as starting to ease and were expected to continue to do so over coming months. As a result, the ''equilibrium'' level of Bank Rate needed to ensure that the 2 percent inflation target would be hit medium term would rise gradually. Implicitly this points to higher official interest rates at some point but the minutes gave away little in terms of the timing. That said the MPC clearly stated that the outlook for UK monetary policy would not be determined by the Fed or any other central bank for that matter. Indeed, given its concerns about the high level of sterling, it would no doubt be perfectly happy if a Fed hike prompted a weaker pound.

The overall tone of the minutes suggests that the likelihood of another cut in Bank Rate has receded markedly in the last month or so. Nonetheless, there would still seem to be no hurry on the part of the majority of MPC members for an early monetary tightening so financial markets will probably continue to focus on the first half of 2016 for the first 25 basis point increase.

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.