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REFILE-Bank of England unanimous on no more QE at first Carney meeting
July 17, 2013 / 9:03 AM / 4 years ago

REFILE-Bank of England unanimous on no more QE at first Carney meeting

LONDON, July 17 (Reuters) - LONDON, July 17 (Reuters) - Mark Carney and all of his fellow policymakers at the Bank of England voted against a resumption of bond-buying at his first policy meeting as governor of the British central bank earlier this month.

In an unexpected move, those policymakers who had previously supported more bond purchases due to the weak economy said it made sense to hold fire until the central bank had decided whether to provide clearer guidance on future interest rates, according to minutes of their meeting.

Finance minister George Osborne, who picked Carney late last year to head the BoE, has asked him to report back by early August on giving interest rate guidance, an alternative means of boosting the economy.

Some policymakers said in the minutes to July’s Monetary Policy Committee meeting that they ordinarily would have voted for more stimulus, and that it remained “warranted”.

“An expansion of the asset purchase programme remained one means of injecting stimulus, but the committee would be investigating other options during the month, and it was therefore sensible not to initiate an expansion at this meeting,” said those policymakers who would otherwise have backed more asset purchases.

BoE markets director Paul Fisher and external MPC member David Miles had backed an extra 25 billion pounds of asset purchases in recent months, along with former governor Mervyn King.

Other MPC members’ views appeared little changed over the month, with some again expressing doubts about the effectiveness of more bond purchases, even if the economy did need more stimulus now.

Carney is expected to shake up the central bank and give longer-term guidance on future interest rates, something he did while in charge of the Bank of Canada in 2009 and which burnished his reputation for bold thinking.

The BoE took a surprisingly rapid step towards more detailed guidance at its July policy meeting, when it said markets were wrong to bring forward expectations of when British interest rates might go up, given the weak state of the economy.

Policymakers have been immersed in deeper discussions on whether the BoE should use so-called “intermediate thresholds” - linking future monetary policy moves to economic indicators other than inflation.

Last week, Osborne told reporters that clearer guidance by the BoE on monetary policy would help households make better financial decisions and that economies across the world still needed support from what he terms “monetary activism”.

On the economy, the minutes broadly echoed the MPC’s July statement which said recent data had been broadly consistent with its May economic forecasts, noting that “recovery was in train”, but that it remained weak.

Those forecasts included one for economic growth of 0.5 percent in the second quarter, a slight increase from 0.3 percent in the first three months of the year.

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