–6 BOE MPC Voted for Unchanged Bank Rate; 3 for Hike
–BOE MPC Dale, Weale voted for 25bps Rate Hike
–BOE MPC Sentance Voted for 50bps Rate Hike
–8 BOE MPC Voted for Unchanged QE; Posen Voted for stg50bn Increase
–NO Change MPC: Inflation Report Didn’t Imply Immediate Hike Needed

LONDON (MNI) – The Bank of England’s Monetary Policy Committee
split four ways again at its May meeting, with those backing a hike
believing their case had been strengthened by the May Inflation Report.

The minutes of the May meeting showed the voting pattern was
unchanged, with two MPC members, Martin Weale and BOE Chief Economist
Spencer Dale, voting for a 25 basis point hike and Andrew Sentance for a
50bps rise, with the other six MPC members backing no change. The
minutes did, however, reveal that Dale and Weale were more convinced of
the case for a hike than they had been in April.

The April minutes revealed Dale and Weale believed the hike case
was “finely balanced” but the May minutes showed they were more robust
in their advocacy of a hike.

“For three members, the argument for removing some of the monetary
stimulus at this meeting remained strong, and the projections in the May
Inflation Report had reinforced that judgement,” the minutes said.

The May Report showed inflation likely to reach 5.0% and stay well
above target throughout this year on market rate expectations for one 25
basis point hike in the second half of 2011.

For those members backing a hike “the upside risks to the outlook
in inflation in the medium term from global price pressures, and the
possibility that inflation expectations would increase, continued to
outweigh the downside risk that the strength of the recovery would be
insufficient to erode the economy’s margin of spare capacity.”

The view of the dominant no change camp on the MPC was that “there
was little evidence that elevated inflation expectations were becoming
entrenched in wage and price-setting.”

They said it was still too early to tell if the softer activity
data were temporary and while some stimulus withdrawal would be needed
“the May Inflation Report projections implied that this did not need to
occur immediately.”

Adam Posen was again isolated in his call to extend monetary
stimulus through an extra stg50 billion in quantitative easing.

Posen dissented from the central forecasts in the Inflation Report,
saying consumption would be lower than assumed.

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

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