Wednesday, February 22, 2012
Bank unanimous on more easing, split on amount
Posted by David Smith at 09:45 AM
Category: Thoughts and responses

Ahead of the Bank of England monetary policy committee's February meeting, the view was that it was a choice between £50 billion and £75 billion of additional easing. In the event, seven MPC members went for £50 billion and two, Adam Posen and David Miles, voted for £75 billion. The £50 billion crowd noted recent stronger data and the risk that a vote for more would be interpreted as a sign of Bank bearishness.

The MPC's central view is summed up in this paragraph:

"The Committee’s central view was that inflation would decline further during 2012 as the contributions of energy and import prices continued to wane and as spare capacity weighed on wages and prices. But the speed and extent of the fall remained uncertain, and would depend, in part, on the strength of demand. Growth was likely to be volatile in the near term, given the impact of one-off factors, particularly the additional bank holiday associated with the Queen’s Diamond Jubilee in the second quarter. But thereafter growth should strengthen gradually, supported by a recovery in households’ real income growth and the expansionary stance of monetary policy. Headwinds from the weak external environment, tight credit conditions and the fiscal consolidation were, however, likely to continue to depress spending, so that some margin of economic slack was likely to persist."

It notes, however, the risks in either direction, including hgher inflation from energy and commodity price hikes. The minutes are here - and contain no clear hint of further easing.