**MNI: 5 Things We Learned From The Feb BOE MPC Minutes, QIR

By Jamie Satchithanantham and David Robinson

     **LONDON (MNI) - The following are the key points from the February MPC

monetary policy decision and accompanying minutes published Thursday by the Bank

of England:

     - Monetary policy would need to be tightened "somewhat earlier" and "by a

somewhat greater degree" over the forecast period than anticipated in its

November Inflation Report, all members of the MPC agreed. That curve had Bank

Rate rising to 0.7% in Q3, and this MPC commentary leaves the door open to an

earlier hike, quite possibly in May.

     - The MPC also collectively signalled that it aimed to bring inflation back

to target within 2 years, saying that it wanted to return inflation sustainably

to its target at a more "conventional horizon". The MPC's mandate allows it to

take longer getting CPI back to target in exceptional times, and it had been

focussing on the three year horizon, but two years is conventional.

     - The MPC voted 9-0 to keep Bank Rate unchanged at 0.5% and the stock of

total assets at stg445bn. They agreed to reinvest stg18.3bn of cash flows

associated with the redemptions of the March 2018 gilt held by the Asset

Purchase Facility.

     - The Bank's forecast for CPI, based on market expectations, was for it to

remain above the 2% target over the next 3 years and the MPC's projections were

based on a market-implied path for Bank Rate that was around 15bp higher than in

November. That path showed a gradual further rise in Bank Rate to just under

1.2% at the start of 2021.

     - One of the most striking things in the minutes was that while all nine

members of the MPC voted for unchanged policy, none of them dissented from the

line that policy would need to be tightened by earlier and more than expected if

the economy evolved as forecast. Any dovish dissents at future meetings will be

based on the view that the economy is evolving out of synch with the projections

rather than disputing whether more rapid tightening is required if things unfold

as expected.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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