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MPC Minutes

Generali
Generali Posts: 36,411 Forumite
10,000 Posts Combo Breaker
The vote was 6-3. Andrew Sentance voted to increase Bank Rate by 0.5 percentage points. Spencer Dale and Martin Weale voted to increase Bank Rate by 0.25 percentage points.

Adam Posen voted to extend QE.

The interesting bit is where they talk about inflation going with a split between those, presumably that voted for a rise, believing that a 'wage-price spiral' is about to kick off (that is where wages increase because workers need to earn more because prices have gone up; the wage increase force companies to increase prices and so on) and those that felt that a weak economy would force prices down in the medium term.
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Comments

  • NPowerUser
    NPowerUser Posts: 409 Forumite
    Mortgage-free Glee!
    Looking more likely to be November at the soonest before they start hiking rates upwards?
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    NPowerUser wrote: »
    Looking more likely to be November at the soonest before they start hiking rates upwards?

    http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2011/mpc1104.pdf

    They state that the market has priced in an increase in 'the middle of the year' but don't comment further on that. The middle of the year is traditionally June but these are economists we're dealing with so once you seasonally adjust the middle of the year it may well be in November.
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    NPowerUser wrote: »
    Looking more likely to be November at the soonest before they start hiking rates upwards?

    And even then, only if the economy is recovering more strongly than it is now.

    By the time you get to November, you're looking at the VAT rise and Q1 Energy spike rolling off within a couple of months, so why raise it then when inflation will certainly fall anyway?
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • NPowerUser
    NPowerUser Posts: 409 Forumite
    Mortgage-free Glee!
    "An increase in Bank Rate in current circumstances could adversely affect consumer confidence, leading to an exaggerated impact on spending"

    That seems quite an important statement in the Bank of Englands minutes. With rising oil prices and people about to start losing their jobs in the public sector, I cannot see sentiment chnaging anytime soon.
  • ILW
    ILW Posts: 18,333 Forumite
    I've stopped worrying about it lately, most savings and borrowing rates seem to bear no relation with BoE anymore.
  • Heyman_2
    Heyman_2 Posts: 1,819 Forumite
    Generali wrote: »
    The vote was 6-3. Andrew Sentance voted to increase Bank Rate by 0.5 percentage points. Spencer Dale and Martin Weale voted to increase Bank Rate by 0.25 percentage points.

    Adam Posen voted to extend QE.

    The interesting bit is where they talk about inflation going with a split between those, presumably that voted for a rise, believing that a 'wage-price spiral' is about to kick off (that is where wages increase because workers need to earn more because prices have gone up; the wage increase force companies to increase prices and so on) and those that felt that a weak economy would force prices down in the medium term.

    As you were then for another month.

    This talk of a wage-price spiral seems a bit wide of the mark though, don't think there has been anything in the stats to indicate that it's a possibility???
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    ILW wrote: »
    I've stopped worrying about it lately, most savings and borrowing rates seem to bear no relation with BoE anymore.

    Only of interest to the (diminishing) number of people fortunate enough to be on low rate mortgage trackers.
  • tomterm8
    tomterm8 Posts: 5,892 Forumite
    Part of the Furniture Combo Breaker
    Generali wrote: »
    The vote was 6-3. Andrew Sentance voted to increase Bank Rate by 0.5 percentage points. Spencer Dale and Martin Weale voted to increase Bank Rate by 0.25 percentage points.
    .

    Is that the last Sentance vote? IIRC, they are replacing him with a more dovish vote.
    “The ideas of debtor and creditor as to what constitutes a good time never coincide.”
    ― P.G. Wodehouse, Love Among the Chickens
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    Heyman wrote: »
    As you were then for another month.

    This talk of a wage-price spiral seems a bit wide of the mark though, don't think there has been anything in the stats to indicate that it's a possibility???
    i think the argument with the wage spiral is.

    1. continue with inflation, which in the end forces the wage spiral through growth.

    2. continue with inflation which kills growth and we probably end up a mess - possibly deflationary...

    3. inflation goes down and we have no large amounts of growth and no big wage rises.

    number 3 or maybe number 1 are the most likely outcomes IMO.
  • blueboy43
    blueboy43 Posts: 575 Forumite
    Thrugelmir wrote: »
    Only of interest to the (diminishing) number of people fortunate enough to be on low rate mortgage trackers.

    Why diminishing ?

    Can't imagine anyone coming off one of the 'legacy' trackers or SVR's which were normally 1.5-2.5 above base pre 2009.
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