Bank of England (BOE) Monetary Policy Committee (MPC) Meeting Minutes - Visual Analysis

Below you will find visual analysis for member votes from Bank of England, MPC Interest Rate meetings. The graph shows data from the current month along with the 11 months previous. More extensive data can be found in the table at the bottom of the page or by clicking here. You will also find relevant, up-to-date commentary featuring the BOE Interest Rate Statement decisions, market expectations, and how the MPC members' votes are likely to influence the GBP.

BOE MPC Member Votes for the Last 12 Interest Rate Meetings

December 17 2008:	BOE MPC Shrugs off Deeper Cut in December, Unanimous Decision for 1.00 Percent Reduction
November 19 2008:	BOE’s MPC Votes 9-0 for 1.50% Rate Cut in November, More Drastic Cut Considered
October 08 Update:	Post-release: BOE Unanimous in Oct 8th Rate Cut
September 08 Update:	Post-release: BOE Votes 8-1 to Keep Rates On Hold in September
July 08 Update:	Post-release: Sterling received an unexpected boost today as MPC Meeting Minutes revealed a surprise 7-1-1 vote split at the last meeting. Unsurprisingly Blanchflower voted once again for a 0.25% cut. However the surprise was a vote for a 0.25% hike from Besley. The vote split reflects the dilemma the BOE (and many other central banks) finds itself in. On the one hand the economy is showing signs of slowing sharply but on the other CPI has spiked to 3.8% YoY, well above the 2.0% target. Besley felt that an immediate hike was necessary to maintain the Bank’s credibility and contain medium term inflation. Conversely, Blanchflower felt that domestically generated inflation remained low and there was “little or no likelihood of a rise in wage growth”. The majority of the MPC voted, once again, to keep rates at 5.00%. This stance was taken because “credit and other financial markets remained fragile” and any hike would be a surprise to the market. Sterling was boosted to a high of 2.0028 on the day against the US Dollar.
June 08 Update:	Post-release: As expected, the MPC voted 8-1 to keep the UK interest rates at 5.00% at the last meeting. Similarly predictable was Blanchflower’s vote to reduce rates. It seems that the increased risk to inflation has removed any ideas of a rate cut but is still some way from forcing a rate hike. “An unexpected increase in Bank Rate might be counter-productive by appearing to exaggerate the Committee’s concerns about the medium-term prospects for inflation”. Although no rate hike is expected in the near to medium term the MPC did admit that they had underestimated the recent climb in CPI. “Analysis of the April CPI release (where inflation came to 3.0 percent) and news on energy prices had suggested that the path of CPI inflation over the next year was likely to be higher than the central projection of the May Inflation Report”. As Core CPI has proven, recent consumer inflation is being driven by world energy and food prices. The BOE finds itself in a similar position to other central banks in as far as monetary policy cannot have any influence on these soaring costs. Pre-release: The market expects that Monetary Policy Committee officials voted 8-1 to keep interest rates at 5.00% at the June 5th meeting. Once again David Blanchflower is expected to be the only member voting for a cut. The main focus for traders will be any indication that the MPC sees a need to raise rates in the near future in order to contain inflation. However, no such commentary is expected. The BOE was already aware that CPI stood at 3.0% at the May meeting and no mention was made of a rate hike. Further CPI developments have come post June 5th so the meeting minutes will not hold any consideration of yesterday’s 3.3% number.
May 08 Update:	Post-release: The BOE MPC is becoming increasing worried about the effects energy costs are having on consumer inflation. As expected the MPC voted 8-1 for a rate hold at 5.00% at the last meeting, with David Blanchflower the only dissenter. The minutes not that “economic activity was likely to slow… but necessary for inflation to settle close to the target”. The MPC also noted that a rate cut in the May 7-8 meeting would have made the impression that the BOE was trying to manage output growth rather than the inflation target. The Committee continues to be split over the effect of the credit crunch on the UK economy; “For some members, the economy has shown considerable resilience… for other members, there was significant risk that the impact of weakening property markets… could be more substantial than implied by the central projection.” Pre-release: Once again, David Blanchflower is expected to have been the sole voice calling for an interest rate cut at the last BOE Interest Rate Meeting. Rates were kept on hold at 5.00% and it is expected that the vote was split 8-1 in favour of doing so. UK inflation forecasts see CPI rising to just under 4.0% with a sharp YoY rise to 3.0% seen just last week. With these inflationary worries it seems unlikely that the BOE would be willing to lower rates much below 4.50% with some commentary already calling for rates to remain at their current level for the rest of the year.
April 08 Update:	Post-release: Traders were expecting a unanimous 9-0 vote in favour of the interest rate cut earlier in the month with the heavy expectation of more rates to come. However this was not the case as the Monetary Policy Committee was split 3 ways in the April 10th meeting. Tim Besley and Andrew Sentance voted to keep the benchmark rate on hold, while of the 7 voting for a cut, long-standing Dove, Blanchflower opted for a more aggressive cut. The divergence of views would point to a gradual lowering of interest rates as opposed to the aggressive Fed like cuts many economists were expecting from the BOE. Besley and Sentance noted that there is a risk of a premature lowering of rates. “There was risk that a premature cut in Bank Rate might sustain higher inflation expectations by making it appear that the Committee was more focused on offsetting downside news about the housing market, domestic demand or output growth rather than hitting the inflation target in the medium term.” On the other hand Blanchflower renewed his calls for greater acknowledgement of “forward looking indicators” that are, in his opinion, “signalling a market slowdown in domestic activity”.
Mar 08 Update:	Post-release: John Gieve and David Blanchflower both voted for a 25 basis point cut in March's MPC Meeting. However, the majority 7 other members voted to keep the benchmark rate unchanged, sighting market confidence. "Back-to-back reductions might lead observers to think that the committee was focusing on downside risks to demand.." In the medium term the BOE still expects CPI to increase becauase of higher gas and electricity prices. However, recent analysis implies that suppliers may not "pass all of their cost increases forward to higher price". Pre-release: The market expects that the Bank of England voted 8-1 to keep rates on hold at 5.25% on March 6th. Once again the hyper Dovish Blanchflower is expected to be the only member calling for a cut. He has consistently called for the BOE to "lead rather than follow", and "get ahead of the curve". Post release the long-term focus falls on whether the BOE can realistically leave rates unchanged in the face of such aggressive cuts from the US. Historically the UK economy mirrors that of the US and market commentators are beginning to call for the BOE to reduce rates by 0.25-0.50% at the next meeting.
Feb 08 Update:	Post-release: As expected, MPC members voted 9-0 for a rate cut at the last meeting. However, the market was not expecting David Blanchflower to call for a half-point cut. He said, “more weight should be placed on the risk of a very sharp slowdown in UK growth”. The BOE rate setters were all agreed that the UK economy is likely to slow further, but near term inflationary risks remain on the upside due to rising energy and food costs. The predicament caused by slowing economic growth but rising inflation leaves the Bank of England with a very difficult situation to manage. On the one hand inflation has to be controlled, usually by increasing rates. On the other hand the economic downturn must be minimised. So, by reducing rates the BOE is hinting that it is much more concerned by growth prospects than a sharp rise in inflation. Pre-release: At the Feb 08 meeting the BOE made the decision to cut Interest rates by 25 basis points, from 5.50% to 5.25%. The market waits to see how members' votes were cast. A unanimous decision will have a negative effect on the GBP with traders likely to expect further base rate cuts to come, especially if the FOMC continues to aggressively cut. A split decision is likely to add some support to the GBP with some MPC members still not convinced that interest rate cuts are necessary. The market is expecting that the MPC voted unanimously 9-0 to cut interest rates at the last meeting.

BOE MPC Meeting Minutes

2009

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Rate Decision

1.50%

MPC Votes

9 Cut -0 Hold

2008

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Rate
Decision

5.50%

5.25%

5.00%

4.50%

3.00%

2.00%

MPC
Votes

1 Cut - 8 Hold

9 Cut*

7 Hold - 2 Cut

7 Cut - 2 Hold

8 Hold - 1 Cut

7 Hold - 1 Cut - 1 Hike

8 Hold - 1 Cut

9 Cut - 0 Hold

2007

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Rate
Decision

5.25%

5.50%

5.75%

5.50%

MPC
Votes

5 Hike - 4 Hold

7 Hold - 2 Hike

8 Hold - 1Hike

7 Hold - 2 Hike

9 Hike

5 Hold - 4 Hike

3 Hold - 6 Hike

9 Hold

1 Cut - 8 Hold

2 Cut - 7 Hold

9 Cut

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