The U.K. central bank appears to have softened its stance towards ongoing inflationary pressure after a slight easing in price growth and lowered inflation expectations, according to The Daily Telegraph. On Wednesday, the Bank of England published minutes from the April meeting of the Monetary Policy Committee that displayed a notably more cautious tone despite the same voting pattern as in previous months. Andrew Sentance voted for a half-point interest rate increase, Martin Weale and Spencer Dale pushed for a quarter-point rise, and Adam Posen argued for a further £50 billion in quantitative easing.
A survey of inflation expectations from Citigroup and YouGov has shown that price gains are expected to reach 2.9% in 2011, rather than the 3.5% that had been expected in March. Additionally, longer-term expectations dropped to 3.4%, which is the lowest level sine October. Citi economist Michael Saunders said, “Given the evident reluctance of several MPC members to hike rates and the likelihood that the first quarter GDP data will be soft, these YouGov data may allow the MPC to keep rates on hold a little longer.” The minutes noted with concern dropping consumer spending, and pressure from inflation and taxes that is “likely to dampen consumption materially over the next year or so.” The MPC said it still expects to see inflation above the 2% target set by the bank in the short-term.
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