LONDON (MNI) – Bank of England Monetary Policy Committee members
voted unanimously at their December meeting to keep policy unchanged,
united in the belief it was not worth fine tuning policy when
uncertainty over the economic outlook was so high.

The MPC voted nine to zero to continue with the current Stg275
billion of asset purchases and to leave Bank Rate at 0.5%. Divisions on
the MPC remained over the outlook, with some members saying the November
Inflation Report projections meant more quantitative easing was likely
to be needed.

Other MPC members were more skeptical that the Inflation Report
justified further QE, as they argued the balance of risks around the
inflation target were more balanced than in the Report’s central
projection – which showed inflation set to undershoot the 2% target by a
wide margin two years ahead.

The minutes of the December meeting showed there was broad
consensus that the balance of risks to growth and inflation futher ahead
had not changed, although some members believed the news on the month
showed a deterioration in the economy.

The core of the case against changing policy at the December
meeting was the belief fine tuning was unjustifiable.

“All members agreed … that given the magnitude of the current
uncertainties, in the external environment in particular, relative to
the precision with which the appropriate stance of policy could be
calibrated, there was little merit in changing the path of asset
purchases at this meeting,” the minutes said.

Things had not changed much since November, when the MPC also voted
for unchanged policy.

“Overall, the Committee judged there had been little change to the
balance of risks to UK activity and inflation as a result of
developments during the month,” the minutes said.

But they were divided over the interpretation of the forecasts in
the previous month’s Inflation Report.

“Some members continued to note that the balance of risks to
inflation in the November Inflation Report projections meant that a
futher expansion of the asset purchase programme might well become
warranted in due course,” the minutes said.

While “Some other members judged that the risks to inflation around
the target were more balanced in the medium term.”

Analysts had expected the nine to zero vote.

–London newsroom: Tel+44 207 862 7491; e-mail: drobinson@marketnews.com

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