{"id":2550,"date":"2008-04-23T10:25:13","date_gmt":"2008-04-23T10:25:13","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2550"},"modified":"2025-03-27T15:48:36","modified_gmt":"2025-03-27T15:48:36","slug":"split-mpc-dampens-rate-cut-hopes","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2550","title":{"rendered":"Split MPC dampens rate cut hopes"},"content":{"rendered":"<p>My <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/4\/8\/uk-mpc-preview-market-measures-more-important-than-rate-deci.html\">MPC-ometer<\/a> suggested a 6-3 vote for a quarter-point rate cut in April, in line with the <em>Sunday Times<\/em> Shadow MPC. Today&rsquo;s <a href=\"http:\/\/www.bankofengland.co.uk\/publications\/minutes\/mpc\/pdf\/2008\/index.htm\" target=\"_blank\">minutes<\/a> reveal a 6-2-1 split, with Tim Besley and Andrew Sentance voting for no change and David Blanchflower for a half-point move. <\/p>\n<p><span style=\"font-size: 10pt; font-family: arial\"><font style=\"color: #000000\" color=\"#000000\">There has been only one previous occasion of a three-way split in a month when the MPC has changed interest rates &ndash; January 1999, when rates were again cut by a quarter-point. Three-way splits also occurred in May and August 1998 and May 2006; rates were left unchanged in all three cases.<\/font><\/span><\/p>\n<p>The minutes imply a further cut could be delayed until July or even later. Besley and Sentance will remain reluctant to ease aggressively until inflation expectations moderate &ndash; unlikely before late 2008. Within the majority group, some members voted for a reduction this month to keep policy consistent with the gradual easing path implied by the February <em><a href=\"http:\/\/www.bankofengland.co.uk\/publications\/inflationreport\/2008.htm\" target=\"_blank\">Inflation Report<\/a><\/em> projections. On this view, additional action may not be needed until August. <\/p>\n<p>There are also hints of greater concern about exchange rate weakness, arguing for going slow on rate cuts. According to the minutes, a fall in the real exchange rate caused by an increase in the risk premium on sterling assets &ldquo;would tend to boost net trade and warrant a more pronounced slowdown in domestic demand growth in the near term than otherwise&rdquo;. <\/p>\n<p>With inflation risks rising, the MPC is right to discourage hopes of rapid rate cuts but sharply weaker economic news or further financial woes could yet force the Committee&#8217;s hand.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>My MPC-ometer suggested a 6-3 vote for a quarter-point rate cut in April, in line with the Sunday Times Shadow MPC. Today&rsquo;s minutes reveal a 6-2-1 split, with Tim Besley and Andrew Sentance voting for no change and David Blanchflower for a half-point move. There has been only one previous occasion of a three-way split [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2550","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2550"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2550\/revisions"}],"predecessor-version":[{"id":4859,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2550\/revisions\/4859"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}