Minutes
Item 1 – Welcome
The Governor began the meeting by thanking attendees for joining and reminding participants of the purpose of these meetings. The Governor made clear that the MPC would be in listening mode, and that the meeting would be conducted in accordance with relevant competition and conduct laws, as per the terms of reference.
Item 2 – International developments
Market participants opened by discussing developments in major advanced economies outside the UK. The conversation focused on how uncertainty around geopolitics and the future path of energy prices had impacted different countries. They noted the challenges facing central banks as they seek to navigate these conditions.
Market participants also considered the drivers of higher bond yields globally. The resilience of major economies to the energy shock was seen as having contributed to a repricing of expected policy paths. There was a debate about the role of technical factors, including positioning unwinds. Participants also highlighted the impact of duration supply, including from issuance by hyperscalers. There was a discussion of the extent to which recent increases in yields reflected movements in real rates rather than breakeven inflation.
Item 3 – Domestic developments
Market participants discussed the September MPC decision. There was agreement from participants that the prevailing macroeconomic outlook, together with the MPC’s communications, was consistent with financial market expectations that Bank Rate may need to be raised. Consistent with this, market participants noted that expectations for Bank Rate increases were evident, along with risk premia, in the profile of the market curve. The relationship between energy prices and market rates was also noted, with participants linking this to ongoing uncertainty in the global environment.
Market participants viewed the announced multi-year plan for unwinding the stock of gilt purchases held for monetary policy purposes positively. They welcomed the increased transparency and predictability it provided.
Attendees
Market Participants Group (MPG) members
Henry McVey – Kohlberg Kravis Roberts & Co.