–BOE MPC Voted 7-2 For Stg50bn QE Increase At Feb Meet
–BOE MPC Miles, Posen Preferred Stg75bn Boost To QE
–BOE MPC Voted 9-0 For Unchanged Banke Rate At Feb Meeting
–Some MPC – ‘Case Could Be Made’ For No Further Policy Stimulus
–BOE MPC: Stg75bn QE Boost Risked Worrying The Markets
LONDON (MNI) – Bank of England Monetary Policy Committee proved
more divided than expected by the markets at its February meeting, with
two members voting for a bigger than stg50bn boost to asset purchases
and some members recognising that a case could be made for no further
monetary stimulus.
The minutes showed David Miles and Adam Posen both voting for a
stg75bn boost to QE, while the rest of the committee supported the
decision for a stg50bn boost.
Posen and Miles argued that the “considerable marging of spare
capacity remainingh in the economy and the extent of deleveraging still
likely to be required” were factors in the case for a larger increase.
Reasons put forward for the smaller stg50bn option included
stronger data on the domestic and international economies as well as the
impact of the European Central Bank’s LTRO which had “reduced some of
the worst immediate downside risks to the outlook stemming from the euro
area”.
On the inflation outlook, the minutes show that “for some members,
the probability of inflation exceeding the target was slightly higher
than shown in the projection to be published in the February Inflation
Report, and a case could be amsde for maintaining the stance of policy
at this meeting”.
“For others, the case of further easing was more clear cut”.
The minutes show that one key argument for opting for the smaller
increase was that a larger increase could send out a signal to the
financial markets that the committee thought the economic situation was
“weaker than it was”.
–London newsroom: Tel+44 207 862 7491; e-mail: drobinson@marketnews.com
[TOPICS: M$$BE$,MT$$$$]
