"The minutes have been a little more dovish than some in the markets were expecting," said Sara Yates, a Forex analyst at Barclays. "The markets are looking at October/November for the next rate hike."
"Survey-based measures pointed to weak consumption of services in the first quarter," the minutes said. "The volume of retail sales had been broadly flat for some months. And surveys of consumer confidence had remained far below their historic average levels."
The fragility of consumer spending was the main contributory factor to the decision to leave the rate where it is. In the current circumstances, a rate rise would "adversely affect consumer confidence, leading to an exaggerated impact on spending", the MPC said. And evidence from the Bank’s regional agents, published with the MPC’s minutes, highlighted the changes in the way that people are spending.
"Dining out in restaurants had declined but demand for fast food continued to strengthen. And there was some evidence of a switch away from the use of private cars towards public transport," the agents said. There was also evidence that consumers are holding back on non-essential purchases.
Reaction to the minutes was swift and the FTSE 100 index recorded its biggest one-day points gain since last September. Giles Watts, head of equities at City Index said: "Intel kicked things off, with Asian markets posting gains of 1.6% and this continued into Europe."
However, some members, who voted for higher rates, believe a prolonged period of above-target inflation could become embedded in wage and price-setting if the Bank continues to ignore price growth.
“Waiting for this risk to crystallise before beginning to tighten monetary policy could be costly,” they warned.
But it looks as if we have several months yet to test the theory.
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