Investment Clock insights

Bank of England Announcements

Ian Kernohan

6 August 2015

The Minutes suggest that the MPC remains divided on the medium-term outlook for inflation, with one member voting for a rate hike. There had been widespread expectations that two or more members would vote for a hike at this stage. Together with an Inflation Report, which appears to sanction a rate hike in 2016 rather than 2015, this news was taken as dovish by financial markets: gilts rallied and sterling sold off. Given that some members see upside risks to the inflation forecast, we still expect the balance of opinion to move in favour of a rate hike before the end of the year.

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