Thursday, December 6, 2012

BOE holds rate steady and doesn't expand QE target

    The Bank of England (BOE) held its Bank Rate steady at 0.5 percent, as expected, and maintained its current target for purchasing assets at 375 billion pounds.
    The BOE, which has held its rate unchanged since March 2009, did not comment on its decision but minutes from today's meeting of its Monetary Policy Committee will be published on Dec. 19.
    The asset purchase program, also known as Quantitative Easing, was last expanded in July but was completed at the end of last month and members of the MPC voted against expanding it at their November meeting as it was seen having little effect on economic growth.
    The bank is currently purchasing high-quality private sector assets under the Funding-For-Lending-Scheme with the U.K. Treasury in order to help stimulate growth.
   The U.K.'s economy expanded by 1.0 percent in the third quarter from the second, helped by spending from the Olympics, but is expected to remain weak this quarter. On an annual basis, the economy contracted by 0.1 percent in the third quarter after 0.5 percent contraction in the second.
    Headline inflation jumped to 2.7 percent in October from 2.2 percent, above the BOE's 2.0 percent target.  


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