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Minutes > Minutes of the Monetary Policy Committee Meeting held on 31 July and 1 August 2013
 

Minutes of the Monetary Policy Committee Meeting held on 31 July and 1 August 2013

14 August 2013
The Governor invited the Committee to vote on the proposition that:
 
The Committee intends not to raise Bank Rate from its current level of 0.5% at least until the Labour Force Survey (LFS) headline measure of the unemployment rate has fallen to a threshold of 7%, subject to the conditions below.
 
The MPC stands ready to undertake further asset purchases while the LFS unemployment rate remains above 7% if it judges that additional monetary stimulus is warranted. But until the unemployment threshold is reached, and subject to the conditions below, the MPC intends not to reduce the stock of asset purchases financed by the issuance of central bank reserves and, consistent with that, intends to reinvest the cashflows associated with all maturing gilts held in the Asset Purchase Facility.
 
This guidance linking Bank Rate and asset sales to the unemployment threshold would cease to hold if any of the following three knockouts were breached:
 
  • In the MPC’s view, it is more likely than not that CPI inflation 18 to 24 months ahead will be 0.5 percentage points or more above the 2% target;
  • Medium-term inflation expectations no longer remain sufficiently well anchored;
  • The Financial Policy Committee (FPC) judges that the stance of monetary policy poses a significant threat to financial stability that cannot be contained by the substantial range of mitigating policy actions available to the FPC, the Financial Conduct Authority and the Prudential Regulation Authority in a way consistent with their objectives.
 
Regarding the proposition, eight members of the Committee (the Governor, Charles Bean, Paul Tucker, Ben Broadbent, Spencer Dale, Paul Fisher, Ian McCafferty and David Miles) voted in favour. One member of the Committee (Martin Weale), while supportive of the adoption of forward guidance, voted against the proposition in order to register his preference for a time horizon for the first inflation knockout that was shorter than proposed. He nevertheless intended to form his future judgements about the application of guidance and the knockout criteria in line with the framework adopted by the Committee.
 
The Governor then invited the Committee to vote on the propositions that:
 
  • Bank Rate should be maintained at 0.5%;
  • The Bank of England should maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.
 
Regarding Bank Rate, the Committee voted unanimously in favour of the proposition.
 
Regarding the stock of asset purchases, the Committee voted unanimously in favour of the proposition.
 
 

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