BoE minutes, data could mean higher rates to come

The Bank of England yesterday released the minutes of its latest rate-setting meeting. Reuters reports:

All nine members of the Bank of England's Monetary Policy Committee voted to keep interest rates at 5.0 percent this month but they were split over the balance of risks to the inflation outlook.

Minutes of their Dec 6 and 7 meeting published on Wednesday showed the MPC agreed inflation was still likely to ease in 2007 as the effect of high energy prices faded but were still worried the near-term rise could boost wage deals in the new year.

Yesterday also provided other reasons for more rate hikes. Again from Reuters:

Underlying British net mortgage lending scored its strongest monthly increase on record in November, rising 6.5 billion pounds ($12.8 billion), the British Bankers' Association said on Wednesday...

Figures from the Building Societies Association for November were also strong. Approvals -- loans agreed but not yet made -- for November totalled 4,852 million pounds, up from 4,310 million in October.

November's figure was the highest on record, the BSA said, while net loans were 1,314 million pounds -- the strongest November reading for three years...

Meanwhile, credit card lending rose 66 million pounds, according to the BBA, compared with an average monthly fall of 248 million over the last six months, suggesting Britons' appetite for spending on the high street through borrowing may be picking up.

Indeed, the Confederation of British Industry's retail sales balance rose to +25 in December from -9 in November, the highest level since Christmas 2004.

The UK yield curve may be inverted, but monetary policy doesn't look particularly restrictive at the moment.