–BOE MPC Voted 9-0 for Unchanged QE at Nov Meeting
–BOE MPC: Market Capacity Makes It Hard To Raise Monthly Rate of QE
–BOE MPC Voted 9-0 for Unchanged Bank Rate at Nov Meeting
–Some BOE MPC: Inflation Report Shows More QE Will Likely Be Needed
–Some BOE MPC: Risks Around Inflation Target More Balanced

LONDON (MNI) – The Bank of England Monetary Policy Committee voted
unanimously at its November meeting to keep policy unchanged, with the
minutes revealing the MPC feared there would be practical difficulties
if the pace of quantitative easing was stepped up.

Some analysts and strategists have argued that market conditions
mean the MPC does not have the freedom to accelerate QE, and the minutes
showed the committee recognizing this. A reluctance to fine-tune policy
and the risk that inflation will not fall as far and as fast as
predicted in the BOE’s November Inflation Report were also reasons cited
against stepping up the pace of QE.

The MPC voted to leave total QE unchanged at Stg275 billion despite
the Inflation Report showing CPI heading well below target at the end of
the forecast period.

The current Stg75 billion round of QE will only be completed by
February and “market capacity made it difficult to increase the monthly
rate of purchases substantially above what was already under way.”

With QE based on large scale gilt purchases, there have already
been signs of strain at the BOE’s reverse auctions at the long end of
the market, and cover ratios have been trending down at the shorter
maturity ones.

The minutes showed MPC members were divided over the implications
of the below target forecasts in the Inflation Report.

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

They added that anticipation of further QE “might itself have an
effect on asset price and demand.”

However, “Some other members judged that the risks to inflation
around the target were more balanced.”

The Eurozone debacle was cited as a key downside risk, with
policymakers there unable to get to grips with it.

“Failure to tackle successfully the vulnerabilities in the euro
area, and any intensification of financial market stresses, could result
in a much weaker external environment,” the minutes said.

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

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