MPC hawks capitulate as outlook darkens

Sterling dropped against the dollar after the latest MPC minutes revealed no calls for a UK rate hike and opened the door to further QE.

The minutes revealed Spencer Dale and Martin Weale, both of whom had voted for a rate hike of 0.25% for much of this year, opted to support the proposition to keep rates on hold in August. "The slowing in world demand growth and the heightened tensions in financial markets meant the balance of risks to the medium-term inflation outlook had clearly shifted to the downside," the minutes said. Adam Posen remained the only member to call for further quantitative easing, though the minutes suggested "further asset purchases might nonetheless become warranted were some of the downside risks...