Bank of England announced on Wednesday (June 20) June Monetary Policy Committee (MPC) meeting showed the MPC to 5:4 results of the vote to maintain the quantitative easing (QE) scale invariant. This means that, in favor of expanding the number of loose scale jumped from May 1 to 4 people, one of the most striking is that the Bank of England Governor Mervyn King (Mervyn King) added supports the expansion of the QE camp.

Analysts and investors widely expected the Bank of England will be meeting on interest rates in July announced a further expansion of QE scale, this scale is likely to be ? 50 billion, thus bringing the total size to 375 billion pounds.

MPC to expand QE intention is clear

In addition to King, the MPC Committee Posen, Adam Posen, Miles (David Miles) are also in favor of QE expansion to 50 billion pounds, while Fisher (Paul Fisher) proposes to extend the ? 25 billion.

The minutes also show that, the MPC unanimously maintain the 0.5 percent benchmark interest rate unchanged, but the MPC began to discuss the advantages of a rate cut. However, the Committee considers that the current interest rate cuts and the introduction of QE compared to no policy advantage.

March 5, 2009, the Bank of England bank rate down to 0.5 percent, its lowest level since the Bank of England was established in 1694, and thereafter remained unchanged. Bank of England on October 19, 2011 and February 9, 2012 were increased on the basis of ? 200 billion invested ? 75 billion and 50 billion pounds, so buy the total assets of 325 billion pounds.

The tone of the minutes of the meeting, the MPC seems to think that more QE is imminent. They not only pointed out that the judge upside risks to inflation has eased, "and that" the downside risks to growth ".

Therefore, the MPC concluded that "Overall, most members of the judge, further economic stimulus, if not immediately needed, and also may be needed to meet the inflation target.

MPC believes that the euro zone crisis is transmitted to the United Kingdom, through higher bank funding costs and a serious impediment to the current UK economic recovery.

However, the MPC members, most of that before launch more stimulus, it is best to wait for the euro area the situation clear, despite the expansion of irritation may become a necessary choice.

The minutes show that the "From some angles, further stimulate the already guaranteed, but the majority of the members pointed out that what will happen in the next few weeks some of the key events in the euro area have a substantial impact, whether or not to expand the monetary stimulus before the MPC reached observe the developments in these key events, including Greece and France, the electoral process, and the end of this month's EU summit.

The minutes of meetings means that the Bank of England interest rate meeting in July on expanding QE scale of possibilities have been greatly increased. After the release of the Minutes, the pound fell sharply against the U.S. dollar to 1.5650 near.

Low inflation to pave the way for the QE

In economic data, the economic outlook worsened inflationary pressures are greatly reduced, but also paved the way for the Bank of England in July to expand QE scale.

Wednesday's data showed that UK May jobless claims increased 8,100 to 160 million, the market is expected to reduce 4700 April jobless claims decreased by 13,700 people. The unemployment rate remained at 8.2 percent, the high point in the past 16 years.

At the same time, although the level of UK inflation since December 2009, rose to 2% above the target, but due to the fall in oil prices and food prices, leading to price pressures decline.

The data released by the Office for National Statistics (ONS) on Tuesday (June 19) shows, the annual rate of increase in England in May consumer price index (CPI) hit the lowest level since more than two years, but also for the first time in history for May decline in inflation behavior of the Bank of England to further relax the policy space.

French bank Societe Generale in London economist, Brian Hilliard, Hilliard's report on Wednesday that the MPC will be the next meeting on support to expand the scale of asset purchases 50 billion pounds.

Citigroup economist Michael Saunders (Michael Saunders) also think that, obviously MPC hope to further expand the scale of QE, and very important point is that changes in central bank governor Jin Enli field is expected to MPC in the next month to expand QE scale . Sanders is expected before November, the MPC will QE scale ? 75 billion.


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