MNI POLICY: BOE Leaves Policy On Hold; Downside Risks Rise>

--BOE MPC See Economy Evolving Broadly As Expected; Brexit, Trade Risks

--

     LONDON (MNI) - The Bank of England Monetary Policy Committee (MPC) 

was united in leaving Bank Rate and asset purchases unchanged at its 

September meeting, with the economy evolving broadly in line with its 

August Inflation Report projections. 

     The minutes for the MPC meeting ending September 12 showed there 

were concerns about increased downside risks from Brexit uncertainty and 

global trade tensions. 

     -The MPC judged that its "August projections appeared to be broadly 

on track" and it the economy continued to move in line with those 

projections "an ongoing tightening of monetary policy over the forecast 

period would be appropriate." 

     -These projections, however, are based on a smooth Brexit with a 

transition period leading to an end state that is the average of various 

potential deals. 

     That Brexit assumption is not achievable in actuality and the 

minutes cited increased uncertainty among businesses over how Brexit is 

going to unfold. 

     The Bank agents found companies were more uncertain about the 

economic outlook and were consider Brexit plans more carefully and the 

MPC will monitor these developments closely in coming months. 

     -Brexit is a wild card for the UK economy, with the MPC stating 

that "the economic outlook could be influenced significantly by the 

response of households, business and financial markets to developments 

related to the process of EU withdrawal." 

     -The MPC said that while the global economy was growing above trend 

but downside risks were likely to have increased. 

     "Recent announcements of further protectionist measures by the 

United States and China, if implemented, could have a somewhat more 

negative impact," the minutes stated. 

     -The minutes contained no commentary on current market rate 

expectations or any clear indication of when the next rate hike would 

come. For now, the MPC is content for markets to price in very gentle 

tightening. 

     The September meeting was the first for MPC newcomer Jonathan 

Haskel, and he fell into line with the majority with no views in the 

minutes from any member out of synch with their colleagues'. 

 --London newsroom: e-mail:drobinson@marketnews.com

[TOPICS:M$$BES,MT$$$$]