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Boe Minutes Just Released

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maybe the webmaster could conflate the texts on your thread.

2.5 hours later and all we have is 5 posts on your thread and zero on mine! I think we best hold fire on that conflation :lol:

Okay, here's what I draw from it. Comments please folks!

Oil gets it's own paragraph, Merv admits it's a problem that will run, and that the MPC have trouble deciding how to handle it.

Oil

9 Given that new investment in oil extraction often took five to seven years to come on stream ....oil prices could remain high for some while and might even rise further in the near term.

10 The continued rise in the oil price presented a dilemma for monetary policy....

11 The Committee could choose to accommodate the first-round impact of higher oil prices and allow headline CPI inflation to rise temporarily above the target. .... this ..could prompt ...an associated rise in wage settlements.

12 Alternatively, monetary policy could respond to ...effects of the oil price shock and seek to bring CPI inflation back to target more quickly, thereby limiting any change in agents’ inflation expectations. This would imply a tighter monetary policy ... [and] lower wage settlements.

13 In considering these issues, the Committee noted ..., over the past twelve months, whole-economy average earnings growth had not picked up by as much as the rise in CPI inflation..

27 .....This indicated that CPI inflation had increased further to 2.4%. While it seemed likely that less than half of the pickup in inflation since September 2004 had been related to the direct and indirect effects of higher oil prices,

Note what he is saying. They are gonna accomodate oil price rises by allowing infaltion to drift higher, ie interest rates won't be used here to reduce oil produced CPI, but he realises he is playing with fire if wage settlements creep up to counter oil costs. Then most telling he gives this warning:

11 The Committee could choose to accommodate the first-round impact of higher oil prices and allow headline CPI inflation to rise temporarily above the target. .... this ..could prompt an increase in agents’ inflation expectations and an associated rise in wage settlements. If this were to occur, the tightening in monetary policy needed to bring inflation back to target might be associated with larger fluctuations in output and employment.

To me the message is clear. We won't raise rates to counter inflation from oil, but we realise this poses risks. He also admits only half of the inflation can be attributed to oil. Does that sound like rate cuts on the cards to you guys?

Edited by Sledgehead

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Guest muttley
So is Merv and the other 3 who voted for a hold @ 4.75% saying Gordons puppets were right for a 0.25% reduction?

No.They're saying "Now we've done it,we should run with it".

A U-turn would be damaging to the BoE's credibility so soon after the IR drop.All the reasons that were given for the cut are still there.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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