–7 BOE MPC Voted for Unchanged Bank Rate; 2 for Hike
–BOE MPC Dale, Weale Voted for 25bps Rate Hike
–8 BOE MPC Voted for Unchanged QE; Posen Voted for stg50bn Increase
–Most MPC: Recent Events Reduced Likelihood Near Term Tightening
–Most MPC: Weak Activity Likely to Last Longer Than Expected

LONDON (MNI) – Two members of the Bank of England’s Monetary
Policy Committee continued to back a rate hike at the July meeting but
the majority view was that recent events had reduced the likelihood of
near term monetary tightening.

The July minutes showed the majority had no explicit discussion of
the case for further quantitative easing, but they said policy would be
changed if the medium-term inflation outlook shifted substantially up or
down.

The July MPC vote was, as analysts had expected, identical to that
in June. Chief economist Spencer Dale and Martin Weale backed a 25 basis
point hike, with the other seven voting for no change in Bank Rate and
Adam Posen alone is voting for a further stg50 billion in asset
purchases.

Unlike in June, members of the no change camp did not make
reference to the possibility of further asset purchases.

“Overall … recent developments had reduced the likelihood that a
tightening in policy would be warranted in the near term,” the minutes
said.

The economic data have shown the UK’s economic recovery faltering.

The majority view was that “it was likely that the current weakness
in activity would persist for longer than previously thought,” the
minutes said.

Dale and Weale, however, showed no sign of retreating from their
call for monetary tightening, despite acknowledging the weakness of the
economic recovery.

“For two members (Dale, Weale) the argument for removing some of
the monetary stimulus at this meeting had remained strong,” the minutes
said.

“For them, the upside risks to inflation in the medium term from
global pricing pressures and the possibility that inflation expectations
could increase continued to outweigh the downside risk that the strength
of the recovery would be insufficient to eat into the economy’s
persistent margin of spare capacity,” the minutes said.

–London newsroom: tel+44 207 862 7491; email: drobinson@marketnews.com

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