Bank of England Minutes

March 18, 2015

The March meeting of the Monetary Policy Committee produced the third consecutive unanimous vote not to change the policy stance.  Martin Weale and Ian McCafferty, in contrast, had voted unsuccessfully for a 25-basis point rate hike at each of the final five monthly policy meetings in 2014.  According to the minutes, the committee generally perceived that information hadn’t changed much since the February meeting and that the major events in the intervening four weeks involved financial market volatility.  A potential for a stronger pound than assumed certainly against the euro was discussed, and note was made that such could cause a lower inflation trajectory.  The minutes conclude with the following passage:

There was a risk that divergent monetary policy trends, as well as stronger prospects for growth in the United Kingdom than in the euro area, might continue to put upward pressure on the sterling exchange rate. This had the potential to prolong the period for which CPI inflation would remain below the target and exacerbate the risk that lower expectations of inflation might become more persistent. In light of the relatively limited amount of news for the inflation outlook over the month, all Committee members agreed that it was appropriate to leave the stance of monetary policy unchanged at this meeting, although two members regarded this month’s decision as finely balanced. There was a range of views over the most likely path of Bank Rate in future, but all members agreed that it was more likely than not that Bank Rate would increase over the next three years.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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