Thursday, March 5, 2015

BOE maintains rate, stock of assets, as expected

     The Bank of England (BOE), the central bank of the United Kingdom, maintained its benchmark bank rate at 0.5 percent, as widely expected, along with the stock of assets purchased by issuing reserves to commercial banks at 375 billion pounds.
    The BOE, which has kept its rate at technically zero since March 2009 to aid economic recovery, added that minutes of its latest meeting would be published on March 18.
    In December last year the BOE agreed that it would start publishing minutes of the monetary policy committee (MPC) meetings starting with the March meeting but only after a delay of eight years. The BOE will publish transcripts of the part of the meeting at which policy decisions are made along with key inputs.
    Minutes from the February meeting showed that the nine member of the MPC unanimously agreed to maintain rates for the second month in a row due to the weak outlook for inflaton.
    But from August to December last year two MPC members, Martin Weale and Ian McCafferty, voted to raise rates by 25 basis points, arguing rates should be raised before wages start to rise.
    In recent weeks several MPC members, including Deputy Governor Minouche Shafik and Kristen Forbes, have said the next move in rates is likely to be an increase because the fall in oil prices is likely to be temporary.
    On Feb. 24 BOE Governor Mark Carney also told the parliament's Treasury Committee that he and the MPC believe the bank rate is likely to head higher despite a period of near-zero inflation.
     U.K. consumer price inflation fell to 0.3 percent in January, its lowest level since records began in 1989 and sharply below the BOE's 2.0 percent target. The BOE has said inflation was likely to drop below zero in coming months.
    The UK Gross Domestic Product expanded by 0.5 percent in the fourth quarter of last year from the third quarter for annual growth of 2.7 percent, up from 2.6 percent, while unemployment fell further to 5.7 percent in the three months to December.



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