MNI BRIEF: BOE MPC Testimony Shows Splits Continue

The splits amongst Bank of England Monetary Policy Committee members over policy easing and inflation risks were starkly visible in their early remarks to the Treasury Select Committee Wednesday and look set to continue after the MPC split 5-4 in August over a 25 bps cut.

Deputy Governor Clare Lombardelli, who voted against the cut, made the case for a higher degree of policy restriction noting that inflation has been persistently above target in recent years and she said "we've been surprised by food price inflation" which looks set to continue to rise and is key for inflation expectations.

Alan Taylor, who initially backed a 50bps cut in the last meeting,  in his written evidence said he saw a smaller risk now of raised inflation expectations feeding through to persistent inflation as labour market slack opened up but Megan Greene, who voted against easing, said that "the rIsk of higher inflation persistence is higher." Governor Andrew Bailey said inflation risks were up, but downside growth risks had intensified. (see MNI INTERVIEW 2: BOE Cut Too Fast As Wages Spiral - Chadha )