Bank of England edging toward the exit door

Minutes of the Bank of England's recent MPC meeting were released today (Guardian coverage here).  Since new Governor Mark Carney has already instituted a policy of issuing press releases immediately after MPC sessions, the minutes have less import than they used to.  However, markets have taken note of the fact that the decision not to expand the Bank's QE program was unanimous; two members of the 9-person committee who had previously favoured further such easing voted with the majority (and Carney) this time.

As the minutes noted, the Bank sees recent trends in the UK economy as "broadly positive", so the decision not to undertake more QE is no surprise.  That said, the Bank is concerned that Gilt markets are pricing in too much policy tightening, and the minutes therefore reiterated the post-meeting statement  in saying that the main onus on policymakers was to ensure that "stimulus was not withdrawn prematurely".

So the Bank of England is now in the same position as the Fed, clearly preparing to "taper" QE but still trying to figure out how and when to start the process. Some time in August, the Bank is due to present its ideas on "forward guidance" of market rate expectations.  Considering the skittishness of fixed income markets (though, very strikingly, not equity markets) about the whole prospect of reduced monetary stimulus, Carney and his colleagues are going to need a surgeon's touch.