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21 May 2014
BoE Minutes hint at possibility of some MPC members voting for rate hike soon
FXStreet (Łódź) - BoE Minutes from the MPC monetary policy meeting held on 7 and 8 May and released today reveal that the Committee voted unanimously in favor of maintaining the interest rate at 0.5% and the program of asset purchases steady at £375 billion, as widely expected.
Nevertheless, the minutes suggested that the possibility of a gradual rise in interest rates had been discussed and that some of the MPC members could start voting in favor of a hike soon, although they would like to see slack in the labor market decreasing further before making such a move.
According to the minutes "a variety of views on the appropriate path of monetary policy," were presented at the meeting and that “for some members the monetary policy decision was becoming more balanced."
The BoE also said that inflation should move closer to the 2% target in the coming month and that spare capacity was perceived in the region of 1-1.5%. The MPC members Russian Ukrainian tensions and China's credit growth were cited as risks to the UK recovery.
James Knightley from ING suggests that BoE's “first hike will probably come in February, but given the strength in growth, employment and asset prices the risks are skewed towards a slightly earlier move.”
“If we see wages growth pick up – note the impending 3% rise in national minimum wage and the increase in reported pay awards – then we would be more inclined to bring it forward,” the analyst remarks.
Nevertheless, the minutes suggested that the possibility of a gradual rise in interest rates had been discussed and that some of the MPC members could start voting in favor of a hike soon, although they would like to see slack in the labor market decreasing further before making such a move.
According to the minutes "a variety of views on the appropriate path of monetary policy," were presented at the meeting and that “for some members the monetary policy decision was becoming more balanced."
The BoE also said that inflation should move closer to the 2% target in the coming month and that spare capacity was perceived in the region of 1-1.5%. The MPC members Russian Ukrainian tensions and China's credit growth were cited as risks to the UK recovery.
James Knightley from ING suggests that BoE's “first hike will probably come in February, but given the strength in growth, employment and asset prices the risks are skewed towards a slightly earlier move.”
“If we see wages growth pick up – note the impending 3% rise in national minimum wage and the increase in reported pay awards – then we would be more inclined to bring it forward,” the analyst remarks.