Hawk in the nest: BoE minutes reveal at least one member now sees lower risk of rate hike harming recovery

Peter Spence
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Some interest rate setters saw the decision to hike rates become "more balanced" this July (Source: Getty)

The minutes of the Bank of England's reveal that no member of the UK's interest-rate setting committee voted to change policy this month.

Members of the monetary policy committee (MPC) voted 9-0 against a change in policy.

For some on the MPC, it's their first time voting - and analysts didn't expect to see any dissent among the newcomers.

So while a unanimous vote to hold steady was widely expected today, it may be the last MPC vote without a split we see for a while, as the committee's views on the amount of labour market slack diverge.

This month, the minutes reveal that one interpretation of the current situation saw at least one member argue that there is now a smaller risk of hiking interest rates derailing the UK's economic recovery, as "that expansion became more established".

On one interpretation, the risk of a small rise in bank rate derailing the expansion and leaving inflation below the target in the medium term was receding

MPC members generally see the UK's economic momentum looking "more assured", with growth in the first half likely to be at or above the long-term average, but with tentative signs of a modest output slowdown in the second half of the year.

Central bank watcher focus will this month will be on any comments that offer guidance on the timing of a change to interest rates. After the release, Oxford Economics' chief European economist, Dario Perkins, said that the MPC is now "edging towards" its first hike.

Expectations of a change in interest rates have moved around a bit in recent months, with most investors now expecting to see a hike at the end of this year or in the first quarter of 2015. Ahead of today's release, Grant Lewis of Daiwa Capital Markets says that data is adding "to the case for a rate hike this year", with strong jobs data, an upside surprise to inflation, and manufacturing surveys all suggesting that spare capacity in the economy is being used up.

For those wanting a more up to date picture of the Bank's position, governor Mark Carney will speak later today at a Commonwealth Games event in Glasgow.

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