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(Z1) Off Lows, But Remains Weak


Market Closure


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(Z1) Sell-Off Abates

     By David Robinson and Jamie Satchithanantham                                  
     LONDON (MNI) - Three Bank of England Monetary Policy Committee 
(MPC) members, including for the first time Chief Economist Andrew 
Haldane, dissented and voted for a 25 basis point rate hike at the June 
     The MPC also lowered the threshold at which quantitative easing 
unwind is set to begin, saying it was expected to start when Bank Rate 
was around 1.5% rather than the previous 2.0% level. Haldane's 
dissenting view for a hike was the first by a Bank insider since his 
predecessor, Spencer Dale, back in 2011. 
     On QE unwind, the MPC pointed to a gentle lowering of the stg435 
billion pile of gilts that it had purchased. 
     "Any reductions in the stock of purchased assets would be conducted 
over a number of years at a gradual and predictable pace," the MPC 
     This points to a pre-announced programme of QE unwind, with Bank 
Rate remaining the active policy instrument. The new guidance said that 
the MPC viewed gilts reaching maturity and selling gilts as equivalent 
from a policy perspective - entailing QE reduction is likely to come 
from a mix of the two. 
     The majority on the MPC continued to make the case for waiting and 
seeing how the data unfold. There was no explicit commentary on either 
the market rate expectations curve or on the likelihood of a hike in 
     The balance of risks to the economic outlook had shifted as "the 
outlook for global growth had weakened somewhat" but they remained 
confident that the weakness in Q1 domestic growth was "largely 
     The three members backing a hike took the view that the economy was 
developing in line with the May Inflation Report while most labour 
demand and pay settlement data pointed to upside risks. 
     Modest tightening now "could mitigate the risks of a more sustained 
period of above target inflation," the three members voting for a hike 
-London newsroom: e-mail:    
[TOPICS: M$B$$$,M$$BE$,MT$$$$]