MNI POLICY: BOE Slows QE Pace, Haldane Backs No Change

--BOE MPC Votes 8-1 For Extra GBP100 Billion In Asset Purchases

--New Tranche To Be Completed "Around The Turn Of The Year"

By David Robinson

     LONDON (MNI) - The Bank of England Monetary increased quantitative easing

at its June meeting, raising its total asset purchases, but announced a marked

slowing in the pace of purchases as Chief Economist Andrew Haldane broke ranks,

voting in favour of unchanged policy.

     The Monetary Policy Committee voted eight-to-one to increase asset

purchases by GBP100 billion to GBP745 billion. Markets had expected the increase

in QE, but the sharp deceleration in the speed of purchases, and Haldane's vote,

were unforeseen.

     When the MPC sanctioned the previous GBP200 billion round of asset

purchases back in March it said the Bank's markets division should complete them

as soon as was practical and they were on track to be completed by early July.

The new GBP100 billion tranche takes QE out to the end of the year but gives the

impression that there is less likelihood of more QE in the second half of the

year.

     The MPC minutes revealed that while eight members voted in favour of the

GBP100 billion increase Haldane backed unchanged policy.

     He argued that the economic outlook was much brighter than the MPC had

forecast in May.

     "The recovery in demand and output was occurring sooner and materially

faster than had been expected at the time of the previous MPC meeting. If this

persisted, cumulative output losses over the policy horizon could plausibly have

halved compared with what had been expected," according to the minutes' summary

of his views.

     The majority view was that the there was a risk unemployment could turn out

even worse than anticipated and that the large margin of spare capacity would

weigh on inflation.

     Some MPC members cited the role monetary policy could play if Covid-19

infection rates picked up and argued for a swift policy response on risk

management grounds.

     The MPC did leave the door wide open to re-accelerating asset purchases if

things took a turn for the worse.

     "Should conditions worsen materially the Bank stood ready to increase the

pace of purchases," the minutes said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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