MNI REVIEW: BOE MPC: Policy Steady; Probing Brexit Reactions>

-BOE MPC Voted 9-0 for Unchanged Bank Rate at Mar Meeting 

-BOE MPC Voted 9-0 for Unchanged QE Stock at Mar Meeting            

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

unanimously to leave policy unchanged at its March meeting and made no 

direct comment on market rate expectations.

     The MPC fleshed out its thinking on possible business responses to 

the Brexit saga, but said nothing collectively on what its likely 

response to a no deal Brexit would be.

     The following are key points from the minutes and policy decision:

     -The nine-to-zero vote for unchanged policy was in line with all 

analysts' forecasts. With Brexit uncertainty high and signs of some 

weakening in growth, there was next to no chance of the MPC altering 

policy at its meeting ending March 20.

     -The minutes contained further analysis of how businesses might 

react to the Brexit process. Whereas previously the MPC had highlighted 

how uncertainty appears to have been weighing on business investment, 

with investment contracting in every quarter of 2018, it added nuance 

to this picture at its March meeting.

     "A more protracted period of uncertainty might lead to a less 

abrupt reduction in expenditure if companies judged it too costly to 

wait for any resolution to become apparent," the minutes said.

     The committee is looking into how Brexit responses are a mix of 

reactions to the likely end state and the level of uncertainty.

    -The growth forecast for first quarter was nudged up to 0.3% from 

0.2% and the MPC noted that the labour market was somewhat tighter than 

it had expected. Cost pressures have risen, which will put upward 

pressure on pricing.

    "Bank staff estimated that annual growth of unit wage costs had 

risen from 2.2% in 2018 Q3 to 2.9% in the fourth quarter," the minutes 

said.

     -There is some doubt at the Bank about the labour market data. 

Uncertainty from Brexit was reckoned by the Bank's own survey to have 

had a modest negative effect on hiring. The MPC noted that survey 

evidence showed weakening in employment since the start of the year but 

the headline official data have yet to reflect this. 

     -The broad flow of data was reckoned to be in line with the 

February Inflation Report projections and there was no significant new 

line on developments in the global economy. 

     -The Bank's Decision Maker Panel said Businesses put a 33% chance 

on Brexit reducing capital expenditure of the following year and just 

an 8% chance of it increasing.  

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

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