The monetary policy committee was almost unanimous on forward guidance at its August meeting, but not quite. Martin Weale clearly did not think one of the “knockouts” on inflation was tough enough, and wanted it to apply over a shorter time period. In other words, it should take more than an 18-24 month forecast of inflation above 2.5% to make the Bank consider a rate hike. If inflation was running above target over a shorter period – or was expected to do so – the knockout should apply. He did, however, agree to make his future decisions on the framework agreed by the majority.
Also at the August meeting it appears that the two members most enthusiastic about quantitative easing – Paul Fisher and David Miles – look to renew their campaign. both thought the case for more QE remained “compelling” though were happy to give forward guidance a bit of extra time to work. More here.
Also today, the unemployemnt figures were better than expected, given the pattern of the monthly data. The unemployment rate remained at 7.8% for April-June, against fears of a rise. In the latest three months there was a 4,000 fall in unemployment and a 69,000 rise in employment. The claimant count fell by 29,200 to 1.44 million in July, suggesting unemployment overall is on a downward trend. More here.
The piece has been cross-posted from David Smith’s Economic UK with permission.