Jaw-jaw, not more-more

17 July 2013 By Ian Campbell

The new UK central bank governor came out a winner from his first MPC meeting – but only by voting with the BoE majority that does not want additional stimulus. Dovish policy guidance may be coming, but a monetary tide probably isn’t. The pound and gilt yields could edge up.

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The minutes from the July meeting of the Bank of England’s Monetary Policy Committee, the first presided over by Mark Carney, were released on July 17. All nine members, including the new governor, voted against expanding the bond-buying programme. This was an unexpected change from the previous meeting’s 6-3 split.
The minutes revealed a continuing divide on the committee with regard to quantitative easing, with some members seeing more asset purchases as “an effective tool” while others thought the benefits were “likely to be small relative to their potential costs”.
The pound sterling jumped to a two-week high of $1.5247 from $1.5110 before the minutes were released. The euro fell from a four-month high of 87.12 pence before the minutes were released to a session low of 86.34 pence, down 0.4 percent on the day.

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