At the monetary policy meeting held on
All members agreed that, in the absence of other inflationary pressures, it would be necessary to see more evidence of slack being absorbed before an increase in
If policy were tightened prematurely, however, that could be associated with considerable costs in terms of lost output, members noted.
At the Mansion house speech last week, Governor
The economy could maintain its growth and slack would be absorbed more quickly than had previously been expected, the minutes said. In that context, "the relatively low probability attached to a bank rate increase this year implied by some financial market prices was somewhat surprising," it said.
The case for raising
The precise timing of the rate hike would depend on the outlook for inflation. That, in turn, would depend on the data flow, and in particular what that implied for the degree of slack, the prospects for its absorption, and the broader outlook for wages, the minutes showed.
The risk of 2014 hike is clearly growing,
However, the economist said, for now, further downside surprises on inflation and some cooling of the housing market will delay a rate hike until early 2015 and mean that rates rise only gradually thereafter.
The Agents' summary of business conditions showed that capacity utilization was marginally above normal overall, although significant spare capacity remained in some parts of the economy.
In a speech in
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