Tags: Inflation | Fears | Rise | Bank of England | Policymakers | boe

Inflation Fears Rise Among Bank of England Policymakers

Wednesday, 22 Dec 2010 11:09 AM

The Bank of England's Monetary Policy Committee retained its three-way split at December's policy meeting, but a growing number of policymakers worried about rising medium-term inflation risks, central bank minutes showed on Wednesday.

The breakdown of votes at the BoE's Dec. 8-9 meeting was the same as the previous two months' meetings.

Adam Posen called for an extra 50 billion pounds more quantitative easing and Andrew Sentance urged interest rates to rise to 0.75 percent from 0.5 percent, while the other 7 MPC members voted for policy to stay unchanged.

However, a growing number of policymakers were concerned about rising inflation risks, albeit not sufficiently to justify changing policy, especially given the risk of contagion from the eurozone's financial instability.

The minutes said "most" of those MPC members who thought the current policy stance appropriate "considered that the accumulation of news over recent months had probably shifted the balance of risks to inflation in the medium term upwards."

This marks a subtle shift from November's minutes, in which only some MPC members thought risks to inflation expectations had risen.

The MPC as a whole did not believe that short-term growth prospects had altered much over the past month, though the near-term inflation outlook had risen.

November's consumer price inflation unexpectedly rose to a six-month high of 3.3 percent from 3.2 percent, and CPI has been at least a percentage point above the BoE's 2 percent target throughout 2010.

However, the MPC's central view remained that spare capacity in the economy would be sufficient to bring down CPI in the medium term, once one-time price shocks faded.

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The Bank of England's Monetary Policy Committee retained its three-way split at December's policy meeting, but a growing number of policymakers worried about rising medium-term inflation risks, central bank minutes showed on Wednesday. The breakdown of votes at the BoE's...
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2010-09-22
 

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