Bank of England MPC votes 2/7 to hike rates via ForexLive

Minutes of the Bank of England August 2014 monetary policy meeting

• 2 MPC members vote to raise rates
• 7 continue to vote unchanged
• Prior votes 9-0 in favour of unchanged

GBP/USD runs up to 1.6679 from 1.6625

“For most members, there remained insufficient evidence of inflationary pressures to justify an
immediate increase in Bank Rate.”

“For two members, in particular, economic circumstances were sufficient to justify an immediate rise in Bank Rate. These members noted that the continuing rapid fall in unemployment alongside survey evidence of tightening in the labour market created a prospect that wage growth would pick up. They noted that it was possible that wages were lagging developments in the labour market to some extent. If that were true, wages might not start to rise until spare capacity in the labour market were fully used up. Since monetary policy, too, could be expected to operate only with a lag, it was desirable to anticipate labour market pressures by raising Bank Rate in advance of them. Moreover, if recent robust GDP growth rates had been underpinned by stimulatory monetary policy, in addition to a release of pent-up demand driven by reduced uncertainty and improved credit conditions, then the erosion of spare capacity would be likely to remain rapid while policy remained expansionary. In the judgement of these members, even after a rise of 25 basis points in Bank Rate, monetary policy would remain extremely supportive, and an early rise would facilitate the Committee's aspiration that the rises in Bank Rate should be only gradual. “

A lot to chew through in the minutes but I've pulled out the main part. Even with voting switching we're only likely to see a 0.25% rise, which is to be expected but may disappoint some in the market. The two members want to get ahead of the curve and limit any potential damage which is not a bad thing. The question remains on the timing.

posted via ForexLive