Minutes of the BoE MPC's July meeting revealed another expected unanimous vote for no change in either Bank Rate (0.5 percent) or QE (Stg375 billion). However, it seems that for several members the outcome was only clear cut due to worries about the potential fallout from the Greek crisis and without this, the decision would have been much more finely balanced.
There are creeping concerns about the outlook for inflation and since the June deliberations risks appear to have become slightly skewed to the upside. That said, there is still considerable uncertainty about how far wages need to accelerate before they become a real threat to price stability and for some, the deflationary effects of the strong pound remain a major issue.
The bottom line is that with all nine members still opting to maintain the policy status quo, a near-term increase in Bank Rate is unlikely. That said, Governor Carney has already warned that a small tightening is probable around year-end and financial markets will watch the upcoming data all the more closely to see if they support this view. To this end, the average earnings part of the labour force report will be as important as anything else.
The last few months have seen a steady rise in wage growth but underlying pay rates are still historically soft. Moreover, the May headline data were biased up by what seems to have been a temporary blip. Nonetheless, asset prices will now be all the more sensitive to signs of unexpected economic strength.
Note that from next month the MPC minutes will be released alongside the policy announcement. For August this will also coincide with the publication of the new Quarterly Inflation Report (QIR).
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.
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