Free Trial

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

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.