BoE members' stance on monetary policy

LONDON: The Bank of England is widely expected to stick to its current programme of government bond purchases this week and the main interest will be in any behind-the-scenes change in the debate following the departure of asset purchase advocate Adam Posen.

Thursday's decision will be the first for new rate-setter Ian McCafferty, who joins the nine-member Monetary Policy Committee from the Confederation of British Industry. Here is a summary of the existing public positions of the MPC.

For a detailed preview of Thursday's decision, see.

GOVERNOR MERVYN KING

King has long held one of the gloomier views of Britain's economy among MPC officials, and talked of "rough waters" and "storm clouds" rolling in from the euro zone at his quarterly Inflation Report news conference on Aug. 8.

However, he also said there was no urgent need to create more money on top of the 4-month programme of asset purchases agreed in July, and even less of a case to cut interest rates.

"(Cutting interest rates) would damage some financial institutions and would therefore be counter-productive, which is precisely why we haven't done it," he said.

According to minutes of the BoE's Aug. 1-2 meeting, for most MPC members it was "relatively straightforward" to maintain their existing policy stance, as they first wanted to see the effect of a new programme to boost bank lending, the Funding for Lending Scheme (FLS).

King said on Aug. 8: that "although (the FLS's) overall impact is uncertain, the early indications are positive with some banks cutting their loan rates."

DEPUTY GOVERNOR CHARLIE BEAN

Bean has tended to vote with the majority over policy changes and is seen as a centrist on the MPC.

In an interview published on Aug. 15, he said that a surprise rise in British inflation in July was unlikely to change the BoE's forecast that price increases will continue to slow this year and into 2013. He added that there was "some traction" from quantitative easing on British growth, and a clear impact on bond yields.

DEPUTY GOVERNOR PAUL TUCKER

Tucker, who is in charge of financial stability, is seen as one of the more hawkish MPC members. He has made no public policy comments since voting on Aug. 2 to keep the BoE's monetary policy unchanged.

Tucker is the most likely internal candidate to succeed King as governor when he retires next year, but the Libor rate-fixing scandal, which occurred when Tucker was the BoE's executive director for markets, has hurt is standing.

EXECUTIVE DIRECTOR FOR MARKETS PAUL FISHER

Fisher is seen as one of the more dovish MPC members.

On Aug. 15 he was quoted as saying that the Bank of England saw asset purchases as a more powerful way to stimulate Britain's economy than cutting interest rates.

A couple of days later, he told the Financial Times the central bank could look to adjust its quantitative easing programme depending on the success of the FLS.

"The amount of cash in the economy can be regulated through QE. Then we can adjust that according to how well the Funding for Lending scheme works," he said.

EXTERNAL MEMBERS

BEN BROADBENT

In July the former Goldman Sachs economist joined Dale to vote against increasing the BoE's asset purchase target to 375 billion pounds. Like Dale, he did not vote in August to reverse July's majority decision.

IAN MCCAFFERTY

Thursday's decision will be the first for McCafferty, who joins the MPC from the Confederation of British Industry, replacing arch-dove Adam Posen. The market may have to wait until the minutes of the meeting are published on Sept. 19 to find out how his arrival influences the discussion.

While observers are uncertain where to place McCafferty on the traditional spectrum of policy hawks and doves, his previous more upbeat comments about Britain's economy make it unlikely that he will demonstrate the same drive for ultra-loose policy Posen showed over his three years as an external policymaker.

In May, writing for the CBI, McCafferty said further BoE asset purchases could not be ruled out but that a moderate economic pick-up was likely in the second half of 2012 if the global economy improved.

DAVID MILES

Miles has voted for more quantitative easing asset purchases every month since February, making his stance this year even more dovish than that of Adam Posen.

In his last public policy comments, on June 26, he told parliament's Treasury Committee that an interest rate cut could potentially be effective if QE stopped working.

"As long as one has other levers which are effective - which I think we do, quantitative easing - then I think cutting bank rate is not the most attractive strategy."

MARTIN WEALE

Weale has been the most flexible MPC policymaker. After voting for a rate rise to tame inflation for the first seven months of 2011, Weale changed tack, voting with the majority to extend quantitative easing in October, February and July.

On Aug. 24 he was cited as saying that he did not see a case for further monetary stimulus "at the moment".

He also said that he would choose an interest rate cut over more QE, but only if it could be established that it would not hurt bank lending. "Cutting short-term interest rates to zero or to 0.25 percent could produce perverse effects, such as weakening the financial position of certain banks - the interest rates on their deposits - or money market funds."

On Aug. 16 Weale also said that Britain's economy was mired in stagnation rather than recession, with the euro zone debt crisis the biggest source of uncertainty.