Highlights of the Bank of England rate decision on June 15, 2017
- Vote was 5-3, a big surprise
- Vote was expected to stay at 7-1
- Saunders and McCafferty join Forbes in calling for a hike
- Asset targets unchanged
- Prior asset purchase target was £435B
- Prior corporate bond purchase target £10B
Commentary:
- All MPC agree any rate increase would be gradual and limited
- Says CPI inflation could exceed 3% by autumn, sterling fall since May inflation report will add to this if sustained
- Continued employment growth could suggest spare capacity and the BOE's tolerance of above-target CPI is being eroded
- Remains to be seen how large and persistent UK consumer slowdown will prove, notes that confidence is resilient
- It's "striking" that UK wage growth remains so weak relative to historic norms
- Expects Q1 GDP growth to be revised to +0.3%, sees Q2 at +0.4%
- For some, slack in the labor market diminished
Big surprise here and the pound has jumped to 1.2770. There was talk of more QE or a rate hike in the future but the BOE is headed in the other direction despite the political uncertainty.
