MNI: BOE MPC: 3 Votes For Hike; Lowers QE Unwind Threshold>

     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 

meeting. 

     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 

stated. 

     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 

August. 

     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 

temporary." 

     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 

maintained. 

-London newsroom: e-mail: david.robinson@marketnews.com    

[TOPICS: M$B$$$,M$$BE$,MT$$$$]