Bank of England MPC united on holding interest rates and stimulus

Mark Carney

The Bank of England is adopting a wait-and-see approach to providing a further boost to the UK economy as it assesses the strength of the recent pickup in activity.

Minutes of the September meeting of Threadneedle Street's monetary policy committee showed that some of the nine members thought additional stimulus would be warranted but only if recovery faltered.

But with the official data upbeat between the August and September meetings of the committee, there was no pressure for an immediate change of policy.

The minutes show that the MPC voted unanimously to keep interest rates at 0.5% and to leave the stock of assets bought under the quantitative easing programme unchanged at £375bn. The Bank announced in August that it was providing "forward guidance" about the future conduct of monetary policy, with a commitment to leave the official cost of borrowing unchanged at least until unemployment fell to 7%.

The MPC said it would only revisit that pledge if inflation threatened to breach its 2% target in 18-to-24 months time, if there were signs that the public was starting to lose faith in the Bank's commitment to keep inflation low, or if there was evidence of an asset bubble developing that could only be kept in check by raising interest rates.

Minutes of the September meeting show that no MPC member believed that any of the three so-called "knockouts" had been breached.

"Members had different views about the extent to which a further loosening of the monetary stance might be warranted, based in part on their judgements about the speed with which the degree of slack in the economy might be reduced if the momentum in demand continued to grow", the minutes said.

"This remained difficult to judge, and there had been few developments to shed light on it since the committee's previous meeting. Over the month the evidence was consistent with a recovery at least as strong as that expected at the time of the August Inflation Report. Were the recovery to falter, the case for further asset purchases would be stronger. But no member judged that further stimulus was appropriate at present."

Powered by Guardian.co.ukThis article was written by Larry Elliott, economics editor, for theguardian.com on Wednesday 18th September 2013 10.10 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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