By David Schutz, THE TAKEAWAY: MPC member changes mind oneasing; QE vote 8-1 as BOE minutes strikehawkish tone -> BOE wary ofupside CPI risk -> Cable jumps on the news Adam Posen ended his push for increased quantitative easing and the dovish David Miles appeared wary of upside inflation risks, minutes from the BOE’s most recent meeting revealed today. In an abrupt change of mind, Posen joined the majority of the Monetary Policy Committee in voting to leave easing unchanged, while Miles described his views on increased easing as “finely balanced.” All 9 MPC members voted to keep interest rates unchanged at ultralow levels. Sterling gained as an increase in quantitative easing became less likely. The BOE’s hawkish tone reflected recentcomments made by MPC members suggesting that inflation may proveharder to control than previously believed. MPC member Tuckeryesterday said inflation may not fall as fast as hoped, anddescribed recent news on inflation as “bad.” Upside CPI risks come from oil and commodityprice increases. The recent comments struck a different tonethan last month’s Minutes, in which the central bank saidit sees inflation easing to manageable levels inthe coming years. The BOE Minutes additionally reckoned that GDPresults in Q1 and Q2 may actually register a recession.The central bank said growth could contract in one or successivequarters because of weak construction during the Jubileeholiday. The Minutes also said that the global recoveryis proceeding broadly as expected, concerns out of the Eurozone arenow greater if anything.
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