BOE REVIEW: Policy On Hold, Future Hikes May Be Needed>

     MNI (London) - The Bank of England Monetary Policy Committee left 

policy on hold at its December meeting, although two of its nine members 

voted for a 25 basis point rate cut.

     Collectively, the commmittee said only that future tightening 'may 

be needed', and highlighted the uncertainties around the outlook.

     The following are key points from the minutes and Monetary Policy 

Summary (MPS):

     -The MPC left Bank Rate at 0.75% with two members, Jonathan Haskel 

and Ian McCafferty voting for a 25 basis point cut.

     Their judgement was that core inflation was subdued and growth was 

below trend, resulting in rising spare capacity. Brexit uncertainties, 

not yet clearly resolved, and a weaker world outlook posed downside 

risks in their judgement.

    -The MPC's agreed line has shifted from stating that limited and 

gradual rate hikes are likely to be needed, stating that they "may be 

needed."

    The implication is that the MPC can no longer collectively agree 

that tightening ahead is the most likely outcome.

    -The minutes noted that the recent moves in asset prices meant that 

financial conditions had tightened, which implied a lower medium-term 

outlook for growth and inflation.

     The tightening in financial conditions entails that the MPC has 

less work to do tightening policy than it had previously.

    -The victory of the Conservative Party in the general election and 

its leadership's commitment to getting a Brexit deal done by the end of 

next year may end up reducing uncertainty, but the MPC said it was 

simply too early to tell.

     "There is no evidence yet about the extent to which policy 

uncertainties among companies and households have declined," the MPS 

said.

     Upcoming business surveys, the Bank's own Decision Maker Panel 

survey and the January forecast round will give policymakers the 

opportunity to reassess the likely impact of the Brexit newsflow.

     The December meeting was, primarily, a staging post to the January 

forecast round.   

--MNI London Bureau; tel: +44 203-865-3812; email: 

david.robinson@marketnews.com

[TOPICS: M$B$$$, M$E$$$, MT$$$$, MX$$$$, M$$BE$]