MNI: BOE Holds; Gradual And Careful Withdrawal of Restraint
MNI (LONDON) - The Bank of England kept monetary policy unchanged in March, voting 8-1 to leave the Bank Rate at 4.5%. The only MPC member to vote for a cut this time around was Swathi Dhingra, who voted for a further 25bp cut.
Catherine Mann, February's surprise vote for a 50bp rate cut, fell back into the pack voting to keep rates unchanged.
Governor Andrew Bailey said the MPC "still think interest rates are on a gradually declining path," But he noted a "lot of economic uncertainty at the moment," adding that policymakers will watch evolving events "closely."
In the meeting minutes, the one vote for a cut noted disaggregated data pointing to inflation continuing to decline, and the Bank Rate "needed to account for policy transmission and the risks to supply capacity from a prolonged period of monetary restrictiveness."
GUIDANCE UNCHANGED
The 'guidance' offered by the MPC was little changed on the previous month, with the policy statement saying a "gradual and careful" approach to further removal of policy restraint was appropriate.
There was an acknowledgement of the two-sided risks to price pressures in the period ahead. The minutes said "the Committee was likely to consider scenarios for the risks around medium-term inflation, building on its recent deliberations".
Additionally, the MPC again said it would continue to monitor risks of inflation persistence closely and policy would need to remain restrictive for sufficiently long until risks of a return to target had diminished.
The minutes noted that the MPC saw inflation rising to around 3.75% in Q3, although they highlighted that services inflation was up, but at a slower speed than expected in the February projections.