The minutes of May’s MPC meeting don’t tell us anything that we didn’t already know from the Inflation Report. The key message is that the next move in interest rates will be up, but not for some time. Admittedly, while the vote was unanimous, the decision between holding and hiking rates was finely balanced for two members. But we already knew that from the minutes of April’s meeting. We wouldn’t be surprised if those two (presumably Ian McCafferty and Martin Weale) start voting for a rate rise before the end of the year, but analysts doubt that the rest of the Committee will follow them swiftly. Note that the Committee would not have seen a preview of yesterday’s inflation figures – showing the UK dipping into deflation in April – at its meeting. But in its Inflation Report, the Bank said that it expected inflation to fall to -0.1% in April, so that wouldn’t have been a surprise.Indeed, the minutes reiterate the MPC’s view that the current weakness in inflation will be temporary and that inflation will pick up notably towards the end of the year. But remember that the Inflation Report showed inflation only just getting to its 2% target at the two year policy horizon based on market expectations for rates to start rising mid-2016 – which is about when we expect the first hike.
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