The Bank of England said its case for tightening monetary policy was growing. At the same time, Dave Ramsden, deputy governor of the central bank, joined the Michael Saunders in calling for an end to bond purchases as soon as possible.
Although the central bank's monetary policy committee kept ultra-loose monetary policy unchanged as economists had expected, officials adjusted the wording of the outlook. The pound strengthened as financial markets advanced expectations of the Bank of England's first rate hike to March next year.
Officials said in a statement that policy was expected to be "moderately tightened" in August. "some developments during this period seem to reinforce this argument, but a great deal of uncertainty remains," officials said in a statement. "
The Bank of England is trying to control inflation. The country's inflation rate far exceeded its expectations this summer, reaching 3.2 per cent last month. The central bank's new policy focus was also driven by stronger-than-expected employment data.
This outlook makes the Bank of England follow the US into the more hawkish camp of central banks in the developed world after the Fed announced that officials might scale back their bond purchases as soon as possible, while the Norwegian central bank decided to raise interest rates.
The Bank of England left its benchmark interest rate unchanged at a record low of 0.1 per cent, while its total asset purchases are expected to reach 895 billion pounds ($1.2 trillion) by the end of the year. Policymakers under central bank governor Pele agree that any future tightening should start with raising interest rates.
Ramsden joined the Michael Saunders and asked the central bank to end its bond-buying program as soon as possible, a surprising move.
"there is growing evidence from a range of global and domestic cost and price indicators that inflationary pressures are likely to persist," the minutes said. "policymakers believe that, in accordance with existing policy positions, inflation is likely to remain above the 2 per cent target in the medium term."