–7 BOE MPC Voted For Unchanged Bank Rate; 2 For Hike
–BOE MPC Dale, Weale Voted For 25Bps Rate Hike
–SOME MPC: More QE May Be Needed If Downside Inflation Risks Realized
–BOE MPC Broadbent Voted For Unchanged Policy At First Meeting

LONDON (MNI) – Only two members of the Bank of England’s Monetary
Policy Committee voted to hike Bank Rate at the June meeting and the
possibility of further quantitative easing was mentioned by some
members, the minutes showed.

At his first MPC meeting former Goldman Sachs economist Ben
Broadbent joined the majority no change camp, leaving BOE chief
economist Spencer Dale and Martin Weale alone in voting for a rate hike.

While analysts had anticipated the seven to two vote in favour of
no change, one more surprising development was the news that aside from
Adam Posen, who has consistently backed extending QE, other members saw
it as a possibility.

The minutes set out the views of the no change camp and said “For
some of these members, it was possible that further asset purchases
might become warranted if the downside risks to medium-term inflation
materialised.”

Paul Fisher, the BOE’s executive director markets, said in a
question and answer session Tuesday that he did not rule out more QE.

The data in the month ahead of the MPC meeting showed the growth
outlook had deteriorated, a fact acknowledged by Dale and Weale.

The MPC collectively took the view that the “downside risks to the
prospects for medium-term inflation had increased over the month.”

The no change camp said “the current weakness of demand growth was
likely to persist for longer than previously thought.”

Dale and Weale, however, remained convinced the case for a hike was
strong, with inflation well above target and with the MPC noting it was
set to move higher, maybe to over 5%.

“For two members (Dale, Weale), the argument for removing some of
the monetary stimulus at this meeting remained strong, although both
acknowledged that the data on the growth outlook during the month had
been weak,” the minutes said.

For them the prospect of rising CPI “increased the risk that
households and businesses would come to expect above-target inflation in
the future, possibly leading to higher inflation itself.”

–London newsroom: tel+44 207 862 7491; email: drobinson@marketnews.com

[TOPICS: M$$BE$,MT$$$$]