* Four rate-setters saw minimum rate hike conditions as met
* Four others thought recovery needed more time
* Bailey says he thought conditions had been met
* Growing signs that BoE moving towards stimulus reduction
* Bailey sees signs of levelling-off in pace of recovery
(Recasts with Bailey comments on split)
By David Milliken and William Schomberg
LONDON, Sept 8 (Reuters) - Bank of England policymakers were
split evenly last month between those who felt the minimum
conditions for considering an interest rate hike had been met
and those who thought the recovery was not strong enough,
Governor Andrew Bailey said.
Bailey said he was among the officials who thought the
minimum conditions had been reached, but they were not yet
sufficient to justify a hike as Britain's economy continued to
recover from its nearly 10% pandemic crash in 2020.
At its August meeting, the BoE's Monetary Policy Committee
voted unanimously to keep its benchmark Bank Rate at an all-time
low of 0.1%. Only one member, Michael Saunders, voted for a
reduction in the size of its bond-buying programme.
But the BoE did set out on Aug. 5 how it could gradually
tighten monetary policy and Bailey's comments on Wednesday added
to signs that it is preparing to reduce the massive stimulus it
pumped into the economy last year.
"Let me condition this by the fact that it was an unusual
meeting because there were only eight members of the committee -
so it actually was four-all," Bailey told the Treasury Committee
in the lower house of parliament.
Sterling rallied after his comments.
Last year when Britain's economy was reeling, the BoE said
it did not intend to close the stimulus taps "at least until
there was clear evidence that significant progress was being
made in eliminating spare capacity and achieving the 2%
inflation target sustainably".
Deputy Governors Ben Broadbent and Dave Ramsden said on
Wednesday they also now thought the minimum conditions for a
rate hike had been met. Broadbent said the BoE still needed to
focus on the medium term.
Another member of the Monetary Policy Committee, Silvana
Tenreyro, said she felt the conditions had not been met and that
the BoE should not put too much weight on short-term
supply-chain bottlenecks.
Bailey said Britain's economic bounce-back from its COVID
lockdowns was showing some signs of a slowdown: "At the moment,
we're seeing some levelling off of the recovery. The short-term
indicators are suggesting that."
He stuck to his view that a recent jump in inflation - which
the BoE says will hit 4%, or double its target - would not prove
to be persistent and bottlenecks in supply chains which have
helped to drive up prices were likely to be resolved.
Bailey said the expiry of the government's job-subsidies
programme at the end of this month would probably help employers
to find new workers, but he did express concern about potential
inflationary pressures from a lack of applicants.
Ramsden said he put more weight on an inflationary scenario
than a deflationary one, echoing comments he made in a speech in
July that suggested he might be moving towards voting to scale
back of the BoE's stimulus.
(Additional reporting by Andy Bruce, Alistair Smout and William
James
Writing by William Schomberg
Editing by Gareth Jones)