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Vote split: Could there be a median / mode split?

BOE
BulletMarketsFixed IncomeForeign Exchange
  • As we noted in our BOE preview, one of the key things to watch today will be the vote split. We expect Cunliffe to vote for unchanged rates (there is also a chance that Tenreyro votes for unchanged). We see a good chance either Mann or Saunders (or both) vote for a 50bp hike. We would expect the remaining members to vote for a 25bp hike. So this puts the prospect of a 3-way split as the most likely outcome in our view.
  • If we are right we will see probably a 1-7-1 split (or possibly a 2-5-2 split if we see more dissent both sides). However, if the four MPC members who voted for a 50bp hike were to vote for 50bp this week. And we saw both Tenreyro and Cunliffe vote for unchanged rates, we could have the curious case of a 4-3-2 split (50-25-unch).
  • This would have the modal vote as 50bp and the median vote as 25bp. There hasn't been a time we can recall on the MPC that the median and the mode haven't matched up.
  • To pass a policy on the MPC, a majority vote is needed, so even if the modal vote was for 50bp it wouldn't mean that we would see a 50bp hike enacted. We suspect that the BOE would instead vote in two stages. Stage 1: Members who want to vote for 25bp hike (or larger hike). In this scenario that would be 7-2. Then stage 2: Members who want to vote for 25bp vs 50bp. In this scenario there would be five votes in favour of 25bp and four votes in favour of 50bp.
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  • As we noted in our BOE preview, one of the key things to watch today will be the vote split. We expect Cunliffe to vote for unchanged rates (there is also a chance that Tenreyro votes for unchanged). We see a good chance either Mann or Saunders (or both) vote for a 50bp hike. We would expect the remaining members to vote for a 25bp hike. So this puts the prospect of a 3-way split as the most likely outcome in our view.
  • If we are right we will see probably a 1-7-1 split (or possibly a 2-5-2 split if we see more dissent both sides). However, if the four MPC members who voted for a 50bp hike were to vote for 50bp this week. And we saw both Tenreyro and Cunliffe vote for unchanged rates, we could have the curious case of a 4-3-2 split (50-25-unch).
  • This would have the modal vote as 50bp and the median vote as 25bp. There hasn't been a time we can recall on the MPC that the median and the mode haven't matched up.
  • To pass a policy on the MPC, a majority vote is needed, so even if the modal vote was for 50bp it wouldn't mean that we would see a 50bp hike enacted. We suspect that the BOE would instead vote in two stages. Stage 1: Members who want to vote for 25bp hike (or larger hike). In this scenario that would be 7-2. Then stage 2: Members who want to vote for 25bp vs 50bp. In this scenario there would be five votes in favour of 25bp and four votes in favour of 50bp.