BoE Minutes Show 8-1 Vote on Forward Guidance

Mark Carney, the governor of the Bank of England, failed to secure complete backing for his plan to provide forward guidance on the future path of interest rates, minutes of the August meeting of Threadneedle Street’s monetary policy committee showed.

A record of the MPC’s discussions show that one member – Martin Weale – wanted tougher conditions imposed to ensure that the pledge to hold borrowing costs at 0.5% did not lead to a pickup in inflationary pressure.

The MPC voted 8-1 in favour of Carney’s proposal that the committee would not consider raising rates from 0.5% until the unemployment rate fell below 7%.

Three conditions, or “knockouts”, were set under which the forward guidance would not apply. One of them says that the MPC should consider raising rates if inflation threatens to be above 2.5% in 18 to 24 months time. Weale favoured a shorter period, the minutes said.

via The Guardian

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