BOE - Minutes.

StevieJ

For those interested.

http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2010/mpc1007.pdf

Exocet

If you can't be bothered to click the link, here's an extract...

MK spoke and said that interest rates would need to stay low because nothing much seems to be changing.
AS said we need to be concerned about inflation.
Everyone else said shut up AS.
MK called for a show of hands of those interested in peerages.
Meeting adjourned.

liland2

Exocet wrote: »

If you can't be bothered to click the link, here's an extract...

MK spoke and said that interest rates would need to stay low because nothing much seems to be changing.
AS said we need to be concerned about inflation.
Everyone else said shut up AS.
MK called for a show of hands of those interested in peerages.
Meeting adjourned.

they crashed the pound again:eek:

Exocet

liland2 wrote: »

they crashed the pound again:eek:

Excellent news - good for exports and that will increase house prices.

note to Hamish - I think I am getting the hang of this...

StevieJ

liland2 wrote: »

they crashed the pound again:eek:

Not against the Euro.

HAMISH_MCTAVISH

Exocet wrote: »

Excellent news - good for exports and that will increase house prices.

note to Hamish - I think I am getting the hang of this...

Just think of me as a 12 step programme for crashaholics.;)

nearlynew

Breaking news........


Lying thieves publish latest edition of "the lying thieves handbook"

Thrugelmir

Reading the minutes it's clear the BOE hasn't the foggiest idea either how the economy is going to perform in the short / medium term, or which way inflation of any measure is heading either.

In summary. When interest rates move its going to be sudden. Most likely without warning.

vivatifosi

Thrugelmir wrote: »

Reading the minutes it's clear the BOE hasn't the foggiest idea either how the economy is going to perform in the short / medium term, or which way inflation of any measure is heading either.

Saw on the press preview tonight that there will be a lead article on the economy in tomorrow's Independent. Written by BOE chief economist Spencer Dale, it says that Britain will be hit by a triple whammy: growth prospects hit by austerity budget vs inflation as firms try to keep cash flow intact (not sure whether that is one point as read on review or two). No link on Independent website as yet but may be worth keeping an eye out for.

Thrugelmir

vivatifosi wrote: »

Saw on the press preview tonight that there will be a lead article on the economy in tomorrow's Independent. Written by BOE chief economist Spencer Dale, it says that Britain will be hit by a triple whammy: growth prospects hit by austerity budget vs inflation as firms try to keep cash flow intact (not sure whether that is one point as read on review or two). No link on Independent website as yet but may be worth keeping an eye out for.

Markets in some many ways are so "global". That direct influence over events is minimal in many ways in the era we now live in.

inspector_monkfish

13:29 21Jul10 - BoE July minutes surprise as easing discussed

* BoE votes 7-1 for 0.5 pct, Sentance urges 25 bps rise
* MPC considers "modest easing" as well as tightening
* Growth outlook weakened over past month
* Sterling falls, gilt futures rally on dovish tone


LONDON, July 21 (Reuters) - Bank of England rate-setters discussed easing monetary policy for the first time since February, minutes of their July 7-8 meeting showed on Wednesday, reflecting growing concerns about Britain's economic prospects.

The Monetary Policy Committee's first meeting since Britain's austere emergency budget last month produced the expected 7-1 split in favour of keeping rates at a record low 0.5 percent, as lone hawk Andrew Sentance maintained his call for a 0.25 percentage point rise in rates.

More of a surprise to economists was the MPC's downbeat tone on growth, and the fact that arguments for a "modest easing" in monetary policy -- in practice, an increase to the 200 billion pounds of quantitative easing already pumped into the economy -- were discussed alongside the case for a "modest tightening".

"Clearly we have Sentance at one end of the spectrum but there's a broad range of views on the committee. But now they are clearly concerned about developments in the global economy and particularly the downside risks," said UBS analyst Amit Kara.

The MPC faces a dilemma. British inflation is still well above its 2 percent target after hitting a 17-month high of 3.7 percent in April. But the nascent economic recovery looks increasingly fragile as fiscal austerity becomes the watchword across much of Europe.

Before the minutes were released, most economists had not expected the BoE to raise rates before early next year, yet neither did many see a revival in the quantitative easing programme that was paused in February.

So sterling <GBP=> fell and gilt futures <FLGU0> turned positive on the news, as investors sensed policy tightening could be even further off than they thought.

"The voting arithmetic may indicate that a `hawkish' bias persists within the MPC but our interpretation of the July minutes is that there has been a dovish shift in the balance of opinion," said RBS economist Ross Walker.

"The `hawkish' contingent will be capped at two members and the underlying risks will shift in a dovish direction. By November, a three-way split is more likely than not."

DOWNBEAT ON GROWTH
The minutes were noticeably more downbeat on growth, saying prospects had worsened over the month, possibly into the medium term.

Forward-looking business survey indicators in Britain and overseas had weakened, and pressure in bank funding markets meant the availability of credit to firms and households was not improving as much as before, MPC members said.

Finance minister George Osborne's June 22 budget -- which pencils in 25 percent cuts to most departmental spending -- would probably slightly reduce growth, but averted the risk that a sharp spike in gilt yields could derail the recovery.

However, near-term inflation prospects had also worsened and consumer price inflation was likely to be higher in the rest of 2010 than envisaged in the May inflation report.

"In the light of the news over the month, it seemed likely that growth would be weaker than previously expected but, at least for a while, inflation was likely to be higher," the minutes said.

MPC member Adam Posen said in a Dow Jones interview published late on Tuesday that monetary policy could move either way, and the June budget would not make a significant difference to updated BoE forecasts due next month [ID:nLDE66J20C].

In the minutes, policymakers acknowledged the risk that persistently above-target prices rises could raise households' inflation expectations, but said there was little evidence of this happening so far, with wage growth remaining subdued.

Most members were happy on balance to leave the stance unchanged, confident that spare capacity in the economy would bring inflation back to target in the medium term once the effect of temporary factors had worn off.

Sentance said that a return to growth and a rebound in inflation meant the time for a rate rise was now.