UK: Debate within the MPC about how and when to start easing - SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that the big loser – the only currency to be down even against the dollar – was sterling.

Key Quotes

“Martin Weale attends his last MPC meeting next week and has indicated to the FT that he is now in favour of immediate easing, citing last Friday’s awful PMI as a prime reason to act. He was attended 71 MPC meetings so far (if my maths is right) and has voted to leave rates unchanged 59 times and to hike 12 times. The MPC has never moved rates over that period but perhaps this time, he’ll be a bellwether.

Clearly there is a debate within the MPC about how and when to start easing in response to the referendum result, but no real argument about the fact that the economic impact will be negative, significant, and will require easier policy. To my mind, easier fiscal policy would be a better response but we’re going to get lower rates and more asset purchases and, albeit choppily, a weaker pound too.”