The Bank of England Monetary policy Committee (MPC) minutes for the meeting held on the 9th and 10th July, were released at 9:30am London. The MPC voted 9-0 to leave interest rates unchanged at 0.50% and asset purchases (QE) at $375 billion.
The minutes noted:
“Economists polled by Reuters expected the first increase in February 2015, although they put roughly a 40% probability on it happening during the remainder of 2014.”
“..risk appetite on the month, linked in part to tentative signs that the pace of the global recovery was slowing”
“..job creation skewed to low skilled paid jobs”
The Bank of England noted that there had been a “moderation” in UK housing activity, which previously had been a focus of analysts to justify a rate hike in the near term. The Rightmove Price Index for July, confirmed a decline in July for the first time in 2014.
Prior to the release of minutes, Credit Suisse saw the potential for 1 or 2 dissenters, but failing that more hawkish minutes.
The unexpected rise in CPI (inflation) if part of a broader trend, should impact the MPC members views at next month’s policy meeting. The June CPI release was 0.4% higher than the BoE’s inflation expectations, thought the minutes noted that this could be due to the timing of summer sales.
In the FX markets sterling, was trading session highs just prior to the release of the minutes (1.7094), following the publication that the MPC had voted 9 – 0, sterling weakened against the greenback, trading back down to 1.7070. Support for the currency pair is expected at yesterday’s low of 1.704.
The next key macro data point for GBP will be the BoE inflation report in August.
Link to the Bank of England MPC minutes for the 9th and 10th meeting release