Bank of england minutes pointing to 2016 raise

The minutes from the last Bank of England monetary policy meeting have revealed there remains little dissent within the committee, with all members united in holding rates steady at 0.5%.

Bank of england minutes pointing to 2016 raise
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The latest steer suggests the increasingly strong consensus that a first rate rise in the United Kingdom since the financial crises is going to be a 2016 event is correct.

“Negative inflation is putting money back into people’s pockets and should do no harm for consumer confidence,” said Nick Dixon, investment director at Aegon UK. “The UK economy is heading in the right direction, but muted wage growth and a stable pound sterling make the prospect of a rate rise highly unlikely during 2015.”

Two members of the committee, Martin Weale and Ian McCafferty, had been making hawkish comments in earlier meetings but the minutes from this meeting indicate they are back in line with the majority, although this could quickly change if the data picks up faster than most anticipate.

“A unanimous vote in favour of unchanged rates conceals two voting members – Weale and Mcafferty – biding their time while inflation remains around 0.0%, but who will be increasingly trigger-happy as CPI readings begin to rise,” said Richard de Meo, managing director of Foenix Partners.

“Carney’s recent comments about ‘close’ calls from some of the committee confirms that had CPI not been on a path into negative territory, confirmed this week, these two renowned hawks would have been in favour of a 0.25% rate hike,” de Meo added. “With inflation expected to turn a corner within the next few months, we believe a change in voting will be in evidence within the next two meetings. Just three more votes will then be needed for confirmation of what would be a momentous, crisis-exiting rate hike, with the chances of a 2015 policy change currently looking underpriced.”