–All 9 Boe MPC Voted for Unchanged Bank Rate at Aug Meeting
–Some No Change MPC Members “Considered Case” for more QE
–8 BOE MPC Voted for Unchanged QE; Posen voted for stg50bn Increase
–No Change BOE MPC: Case for More QE “Not Yet Strong Enough”
–Most MPC: Little Merit in Policy Reaction to Euro Area Risks

LONDON (MNI) – Bank of England chief economist Spencer Dale and
Monetary Policy Committee member Martin Weale both dropped their call
for tighter policy and voted for unchanged Bank Rate at the MPC’s August
meeting.

All nine MPC members voted to keep Bank Rate at its historic low
0.5%, while Adam Posen was again isolated in voting for a relaunch of
quantitative easing.

The minutes revealed, however, that some members of the no change
camp considered the case for more QE, but decided it was not yet strong
enough, with markets having already delivered easing by factoring in
next to no policy tightening over the next couple of years.

“Some members considered whether there was a case for increasing
the degree of monetary stimulus by undertaking a further programme of
asset purchases. Those members concluded that the case was not yet
strong enough, particularly in light of the lower path for Bank Rate
now implied by financial markets,” the minutes said.

The minutes made clear that Dale and Weale, and possibly other MPC
members, were still concerned over the risks attached to long run of
above target inflation outturns, but believed the “recent developments
had weakened the case for removing some of the monetary stimulus.”

The MPC discussed the turmoil in the euro area, with members
divided over the extent to which euro area risks should influence
current monetary policy.

Most MPC members believed there was “little merit” in any policy
reaction to euro area risks, which they said were impossible to
calibrate.

The vote outturn was something of a surprise as analysts’ median
forecast was for are repeat of the vote at the July MPC meeting.

In July Dale and 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.

Analysts had, however, raised the possibility that either, or both,
Dale and Weale could have been persuaded by the lower growth and
inflation forecasts in the August Inflation Report to switch to the no
change camp.

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

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