MPC Turns Dovish
The Monetary Policy Committee minutes from the February 2012 meeting are out, and we have not one, but two doves in the house. Adam Posen has again broken ranks, and is joined for first time by David Miles in asking for larger asset purchases, against the MPC consensus for a £50bn extension:
Regarding the stock of asset purchases, seven members of the Committee (the Governor, Charles Bean, Paul Tucker, Ben Broadbent, Spencer Dale, Paul Fisher and Martin Weale) voted in favour of the proposition. Two members of the Committee (David Miles and Adam Posen) voted against, preferring to increase the size of the asset purchase programme by £75 billion to a total of £350 billion.
The updated CPI forecast data has been published as well, and here’s a graph showing how the forecasts have changed over the last four quarters:
Bank of England Median CPI Forecasts
On this metric, the policy easing (£75bn of QE) in Q4 can be deemed to have “worked” somewhat; the median forecast has shifted significantly upwards (from the light blue to the purple line). But the CPI rate remains below the 2% target from 2012 Q4 onwards, which motivates further easing.
