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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
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