MNI: BOE Keeps Rates Unchanged, 24/25 QT AGBP 100BN

The Bank of England Monetary Policy Committee kept interest rates unchanged at 5% at the September meeting, with policymakers voting 8 to 1 in favour of Governor Andrew Bailey's proposition.

As on many occasions, before August's 25bps cut, external member Swati Dhingra preferred an immediate further 25bps cut in rates, highlighting among her reasons policy transmission lags.

The MPC voted unanimously to reduce the stock of government bonds on the Bank's balance sheet by an additional GBP100 billion in the year from October. That will be comprised of GBP 87 billion of maturing bonds rolling off and GBP13 billion of active sales, down from active sales of around GBP50 billion in the current 12 month period.

The Bank voted before news of the Federal Reserve's 50bps rate cut broke, with the MPC noting in the minutes the Fed was expected to ease by either 25 or 50 bps.

GUIDANCE

Guidance was little changed, with policymakers noting "a gradual approach to removing restraint remains appropriate" in the absence of material developments.

However, the MPC again accepted would need to remain restrictive for sufficiently long" to return inflation to target.

The risks of inflation persistence will be closely monitored and would decide the appropriate policy restrictiveness at each meeting, noting in the minutes that a full assessment would be made in the November forecasting round.

Governor Andrew Bailey said in a statement alongside the release that the Bank "should be able to reduce rates gradually over time," but noting rates should not be cut too fast or by too much.