BoE MPC voted 9-0 to keep policy unchanged in June

inspector_monkfish

09:30 17Jun09 BOE MPC VOTED 9-0 TO KEEP RATES AT 0.5 PCT IN JUNE, MAINTAIN 125 BILLION POUND QUANTITATIVE EASING

09:30 17Jun09 BOE-NO REASON TO THINK MEDIUM TERM OUTLOOK FOR ECONOMY, CPI HAD CHANGED MUCH SINCE MAY FORECASTS

09:30 17Jun09 BOE-RISK OF CONTINUED SHARP CONTRACTION IN OUTPUT IN NEAR TERM RECEDED SOMEWHAT

09:30 17Jun09 BOE-NEWS OVER MONTH MOSTLY ENCOURAGING, POSITIVE DEVELOPMENTS HAD POTENTIAL TO REINFORCE EACH OTHER

09:30 17Jun09 BOE-KEY MEDIUM TERM DOWNSIDE RISKS NOT CHANGED, IN PARTICULAR CREDIT SUPPLY REMAINS CONSTRAINED

09:30 17Jun09 BOE-RISE IN STERLING COULD REDUCE BOOST TO NET TRADE AND WOULD REDUCE CPI PRESSURES IN SHORT TERM

09:30 17Jun09 BOE-SOME SIGNS QE RAISING INSTITUTIONAL INVESTORS MONEY HOLDINGS,1ST STAGE IN TRANSMISSION MECHANISM

09:30 17Jun09 BOE-SIGNS CORPORATE ASSET BUYING HELPING MARKET FUNCTION,NO FALL IN MANY LIQUIDITY PREMIA INDICATORS

09:30 17Jun09 BoE MPC voted 9-0 to keep policy unchanged in June

LONDON, June 17 - The Bank of England's Monetary Policy Committee voted unanimously to keep interest rates at a record low of 0.5 percent and maintain its 125 billion pound quantatitive easing programme, minutes showed on Wednesday.

Minutes to the June 3-4 MPC meeting showed no arguments were advanced for either pumping more newly-created money into the economy or scaling QE back.

Policymakers agreed the medium term outlook had not changed since their May forecasts even though there had been some encouraging news over the month which could gather momentum by boosting confidence.

"Overall, the risk of a continued sharp contraction in output in the near term had receded somewhat," the BoE minutes said.
"However, there was no reason to conclude that the medium-term outlook for the economy, and thus inflation, had changed materially since the Inflation Report had been finalised."

The minutes are unlikely to settle the debate about whether the central bank will need to take more action to help pull Britain out of recession.

Many policymakers believe it is still too early to say the economy has turned and the outlook may not be any clearer until towards the end of the year.

The BoE is worried that significant risks remain at home and overseas, especially the outlook for credit supply which remains constrained.
"Even if developments over the month had been positive, the increase in confidence apparent in some financial market indicators and some household and corporate sector surveys remained fragile," the minutes said.

The MPC noted they had acquired just less than 80 billion pounds of assets already by creating new money and that it would take two more months to complete the 125 billion pound programme.

While they said it was too early to assess the impact of QE on nominal demand, there were some tentative signs it was boosting the money holdings of institutional investors -- the first step in the transmission mechanism.

The other main news over the month had been the appreciation of sterling and oil prices rising sharply.

The former might represent the unwinding of some of the "excess pessimism" about the UK economic outlook but would reduce the positive effect to net trade, particularly if the currency rose further, the BoE said.
It would, however, tend to dampen inflationary pressures in the short term while the increase in oil prices would have an opposing effect.