November’s Bank of England MPC meeting is set to send base rates 25 bps higher. Ever since MPC member Andy Haldane’s comments in June, markets have started to price in rate rises. Comments from another member, Vlieghe, further surprised the market and his rate rise stance has been broadly supported by the Bank’s Governor, Mark Carney.
Markets have accepted a rate rise for November as a foregone conclusion and if nothing else a totemic moment. A generation has not seen rates go up in the UK; the last rise was over 10 years ago in June 2007.
What is a matter for debate in markets is the rate rise after November’s – and the simplest way of gauging this is the counting of the votes of the nine MPC members.
The slimmest majority at 5-4 would leave the market unsure that there might be a ‘next’ rate rise in short order and believe that it was ‘one (rate rise) and done’. After all a 0.25% increase only reverses the cut made immediately after the Brexit referendum vote in 2016.
An (unlikely) vote of 9-0 would show a unified MPC worried about ongoing inflation and the capacity for low unemployment to feed through to wage pressures. An 8-1 would fall into this camp too, as David Ramsden’s most recent comments suggest he is not for higher rates. No-man’s land is 7-2 and yesterday John Cunliffe commented that a rate hike was an “open question” suggest his vote could go either way.
But a 6-3 vote would see a committee viewed as not necessarily gunning for further rate rises. Suffice to say, as ever, market watchers are desperate to read the tea leaves for future rate hikes…but it seems all done for November, bar the counting.