MARK Carney’s first interest rate vote as governor of the Bank of England will be revealed on Wednesday in keenly awaited minutes of his inaugural monetary policy committee (MPC) meeting.
The Bank boss made an immediate impact as policymakers hinted in an unexpected statement that interest rates would remain at their historic low for some time.
While the nine-strong committee held quantitative easing (QE) at £375 billion and rates at 0.5 per cent as expected, the statement was seen as a bold step towards a policy of “forward guidance” under Carney’s leadership.
Described as “pretty aggressive stuff’’ by one economist, the rare step of issuing a statement alongside its no-change decision took the City by surprise, just four days into Carney’s new job.
The stock market surged as the MPC said expectations of a rate rise to come next year were “not warranted’’, with investor sentiment boosted further by European Central Bank chief Mario Draghi’s explicit commitment that its 0.5 per cent interest rate would remain the same or lower for “an extended period of time’’.
Minutes of Carney’s debut meeting will show the thinking behind the move, but also how he played his hand, and whether he resisted the urge to push for more QE against more reticent fellow members of the committee.
His predecessor, Sir Mervyn King, was repeatedly outvoted six-to-three in his final months as he sought to boost the stimulus by £25bn.