— Adds Detail To Version Transmitted At 0930GMT
–BOE Minutes: 6 MPC Voted for Unchanged Policy; 2 for Rate Hike
–BOE 1 MPC Member, Posen, Voted for stg50bln Extra QE
–BOE MPC’S Sentance, Weale Voted for 25bp Rate Hike
–Most MPC: Medium-term Inflation Risk Probably Shifted Up
–Some MPC: Jan Policy Decision Was “Finely Balanced”

London (MNI) – Monetary Policy Committee member Martin Weale joined
Andrew Sentance in voting for a 25 basis point rate hike at the MPC’s
January meeting and for some of the majority who supported unchanged
policy the decision was “finely balanced,” the minutes revealed.

Analysts had expected only Sentance to have backed a hike and Adam
Posen to vote again for more quantitative easing. The minutes showed,
however, that while Posen did indeed vote for an extra stg50 billion of
QE Sentance was no longer isolated in backing policy tightening.

The minutes also repeated the line used in December that, for most
MPC members, the balance of inflation risks was moved upwards.

“Recent developments implied that the risks to inflation in the
medium term had probably shifted upwards. For some of those members the
decision this month was finely balanced,” the minutes said.

The majority on the MPC continued inflation would fall back to
around target in the medium term as downside risks to demand remained
and the eurozone debt crisis “remained capable of delivering a
significant jolt to UK demand.”

Even among the MPC majority there was a ‘spectrum of views’ on just
how much weight to attach to the various arguments for or against a
policy change, the minutes said.

Even Posen, although he thought CPI would fall below target in the
medium term, said that a sustained upward trend in commodity prices or
a shift in sentiment against sterling could outweigh the domestic forces
pushing down on inflation.

The minutes therefore showed Posen setting down conditions for
withdrawing his vote for an extension of QE.

The minutes showed the committee are looking ahead to the February
inflation report forecast round as a chance to fully evaluate the change
in the inflation outlook.

The minutes set out the thinking of Sentance and Weale, the two
members who backed an immediate hike in Bank Rate, it said for them:

“The evidence suggested that the balance of risk was already
sufficiently clear to warrant an immediate increase in Bank Rate. The
continued elevated rate of inflation, which was forecast to persist,
posed a significant risk to inflation expectations and hence to the
medium-term outlook for inflation.”

They said this “made more powerful the case which had been building
for some time for a gradual rise in Bank Rate.”

Overall, the minutes were clearly more hawkish than most analysts
had forecast.

–London newsroom: 4420 7862 7491 e-mail: drobinson@marketnews.com

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