Thursday, November 8, 2012

UK keeps rate and asset purchase program unchanged

    The Bank of England held its interest rate and the size of its asset purchase program steady, as expected.
    The BOE said in a brief statement after a meeting of its Monetary Policy Committee that the official Bank Rate that is paid on commercial bank reserves would remain at 0.50 percent and the stock of assets purchased by the issuance of central bank reserves at 375 billion pounds.
    The BOE has held its bank rate unchanged since March 2009, when it also started to purchase assets in an attempt to keep rates low and inject funds into the struggling economy. The asset purchase program has been increased several times, most recently by 50 billion pounds in July, and is set to be completed during the month of November.
    A stronger-than-expected 1.0 percent expansion in the UK economy in the third quarter from the second quarter had trimmed expectations among economists that the BOE would expand its asset purchase program further.

    Compared with the third quarter of 2011, the UK economy stagnated, following annual contractions of 0.5 percent in the second quarter and 0.1 percent in the first quarter.
    The headline inflation rate eased for the sixth month in a row to 2.2 percent in September from 2.5 percent in August.


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