The pound trimmed some its early gains against its key counterparts in European deals on Wednesday, as minutes from the Bank of England’s June monetary policy meeting showed that there remains more slack that should be absorbed before increase in Bank Rate would be warranted and cautioned that premature rate hike would threaten growth.
Bank of England’s policymakers agreed that, in the absence of other inflationary pressures, it would be necessary to see more evidence of slack being absorbed before an increase in Bank Rate would be warranted, the minutes from bank’s meeting held on June 4 and 5 revealed.
The case for raising Bank Rate gradually and cautiously was reinforced by uncertainty over its likely impact on the economy, it said.
The precise timing of the rate hike would depend on the outlook for inflation. That, in turn, would depend on the data flow, and in particular what that implied for the degree of slack, the prospects for its absorption, and the broader outlook for wages.
At the meeting, the MPC voted to retain the record low 0.50% interest rate and quantitative easing at GBP 375 billion .
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