Wednesday, November 23, 2011
Bank votes 9-0 for no change
Posted by David Smith at 12:00 PM
Category: Thoughts and responses

The Bank of England is into unanimity these days, voting 9-0 for more QE in October and by the same margin to leave Bank rate at 0.5% and the total of QE at 275 billion in November.

While the monetary policy committee expects inflation to fall sharply it also acknowledges the risk that it will stay high "as a result of companies rebuilding margins more aggressively than anticipated; a greater-than-expected response of wage growth to a gradual increase in productivity growth or to the past squeeze in real incomes; or expectations of above-target inflation becoming embedded in wages and price-setting."

That will be for later. this was its verdict this time: "The Committee noted that the existing programme of asset purchases would take a further three months to complete and market capacity made it difficult to increase the monthly rate of purchases substantially above what was already under way. During that time the Committee could gather evidence as to the impact of the purchases on asset prices and the real economy. It could also take account of events in the United Kingdom and abroad.

"Some members noted that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchase programme might well become warranted in due course; anticipation of that might itself have an effect on asset prices and demand. Some other members judged that the risks to inflation around the target were more balanced." The minutes are here.