25 & 50bp Hikes Discussed, Extent Of CPI Moderation Will Decide Direction Of Monetary Policy

"Members agreed that the sooner supply and demand were better matched in the economy, the lower the overall cost of reducing inflation. The Committee discussed the extent of additional monetary tightening required to achieve its Remit. Members noted the rapid pace and extent of tightening to date implies monetary policy is now contractionary. The Committee agreed that the full impact of this monetary tightening is yet to be fully realised. Committee members agreed that the OCR needed to reach a level where the Committee could be confident it would reduce actual inflation to within the 1-3 percent target range over the forecast horizon."

• "The Committee agreed that a further increase in the OCR is needed at this meeting to ensure core inflation and inflation expectations begin to fall. The Committee discussed 25 and 50 basis point increases at this meeting. In aggregate, economic projections were little changed relative to the February Statement. The Committee was comfortable that current lending rates faced by businesses and households will help ensure core inflation and inflation expectations begin to moderate. However, wholesale interest rates have fallen significantly since the February Statement, and this could put downward pressure on lending rates. As a result, a 50 basis point increase in the OCR was seen as helping to maintain the current lending rates faced by businesses and households, while also supporting an increase in retail deposit rates."
• "Looking ahead, the Committee is expecting to see a continued slowing in domestic demand and a moderation in core inflation and inflation expectations. The extent of this moderation will determine the direction of future monetary policy."