The Bank of England MPC makes their monthly decision on interest rates and QE today at 12.00 GMT
The latest in our series of previews looks at the BOE MPC meeting and announcement tomorrow
As always right now, with interest rate rises not likely to be seen until the end of 2015/early 2016, we will expect no change to either the interest rate or QE but that’s not to say there won’t be a lot to discuss
Here’s the highlights from the last meeting and we can expect the same themes to continue
- decision for hawks to change vote was finely balanced
- they now agree that rate rise would increase chances of prolonged low inflation
- MPC sees a “roughly even ” chance that CPI will fall below 0% at some point in H1 2015
- downward effect on CPI likely to be temporary if oil prices stabilise
- MPC alert to low inflation impact becoming entrenched
- growth remains solid in UK and US
- Eurozone risks have increased
- monetary policy could and would be adjusted at appropriate time for 2% inflation target to be hit
- sees medium-term upside pressure on CPI from faster increase in incomes
- sees early signs of wages pick-up, lower mortgage rates
Rate cuts by the BOC and RBA, and indeed a host of others including Romania today, will not have gone unnoticed and with the conversion last time of the two hawks , Weale and McCafferty, could we even see one of the MPC now turn dovish and vote for further easing?
Well, governor Carney would appear to have ruled that one out in recent speeches including this one that said the BOE wouldn’t be derailed by oil price falls and that the UK was a different case to others. And this one that says they could keep rates low for longer if needed, rather than more QE
BOE MPC – Another 9-0 expected
But that’s not to say that others on the MPC share his opinion and if a week is a long time in politics then a month is a lifetime in the fickle world of financial markets and, has been clearly shown by the SNB, in central banking too. There’s certainly plenty to discuss and recent data has not been entirely convincing. The MPC has always rightly kept a keen eye on global developments and that is now becoming ever more important
I fully expect another 9-0 to be the outcome of the voting to keep rates and QE on hold which we will get confirmed with the publication of the Minutes on Feb 18,( always published on the Wednesday of the second week following) but I’m just throwing another possible scenario into the mix. And surely it’s too early for the hawks to ruffle their feathers again?
Until we get the Minutes the guesswork will continue but tomorrow’s announcement should have minmal impact on prevailing prices.
Carney – In need of divine inspiration on the timing of rate hikes
