United Kingdom: Bank Of England Minutes For June 2011 Meeting

Bank of England published the minutes for the June 2011 meeting.  As a reminder, the Monetary Committee of Bank of England maintained Bank rate at 0.5% and the size of asset purchase programme a.k.a. quantitative easing target at £200 billion.

As one of the biggest hawk Andrew Sentance was replaced by Ben Broadbent, the vote this months shows that the hawkish camp has lost one member.  As a result, only 2 members (Spencer Dale and Martin Weale) voted for an increase of Bank Rate by 25 basis points, while 7 voted for maintaining interest rate unchanged.  As far as the quantitative easing is concerned, only Adam Posen voted for increasing the size of the asset purchase programme to £250 billion, while 8 other members prefer to maintain the size.

As the latest inflation figure shows, inflationary pressure in the UK remains high, as CPI inflation stayed at 4.5% in May.  The latest minutes points out that CPI inflation remains well above the 2% target, and is likely to get higher sill in the coming months.  However, the downside risks of potential weakness of the economy persists, as economic growth remains below trend.  As the global economy slows down, the outlook remains clouded.  The minutes also points out the possibility that the fiscal mess in the peripheral of Eurozone may give more shocks to the global economy.

Of course, inflation and growth is a difficult balance to strike, and this happens now for virtually all central banks.  As such, the Bank of England final decision was to maintain everything unchanged for another month.

This article originally appeared here: United Kingdom: Bank of England Minutes For June 2011 Meeting
Also sprach Analyst – World & China Economy, Global Finance, Real Estate

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