Bank of England Votes Unanimously to Maintain Current Policy

BoE minutes from the July 8-9 meeting showed MPC members discussing if an “immediate change” to the asset purchase target was required but decided that there had not been enough new evidence to justify this and that the August Inflation Report would “provide an opportunity to reassess the stock of asset purchases”. Hence, not much more information on that subject than what was given in the short statement following the rate announcement earlier this month. The Minutes showed that MPC members thought that the medium-term outlook for the economy had not changed very much since May, though near-term downside risks to GDP had diminished somewhat and the immediate inflation outlook might be a little higher. The MPC also noted that the Q2 GDP contraction (due Friday) would probably be smaller than it had thought two months ago and surveys also suggested that there was more momentum going into the second half of the year. But a lack of bank lending was still weighing on the economy. The MPC was unanimously behind keeping the repo rate steady at 0.5%. The 10-year September Gilt future initially rose on the minutes release but quickly fell over 20 ticks compared to pre-announcement levels as the statment did not include any real suggestions that the asset target will be upped next month.