Thursday, February 9, 2012

Bank of England Expands APP by 50B to 325B

The Bank of England (BoE) held the Bank Rate at 0.50%, and expanded its Asset Purchase Program (Quantitative Easing) target by 50 billion to a new total of GBP 325 billion, after increasing it by 75 billion at its October meeting.  On its asset purchase program, the Bank said: "In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term."

The Bank also held the official Bank Rate unchanged at 0.50% at its December meeting last year; the rate has remained on hold since March 2009, when the Bank reduced the interest rate by 50 basis points to 0.50%.  The United Kingdom reported annual consumer price inflation of 4.2% in December, 5.2% in September, 4.5% in August, and 4.4% in July, and still above the Bank's inflation target of 2.00%.

The UK saw quarterly GDP growth of 0.5% in Q3 this year (0.1% in Q2, 0.5% in Q1), while annual economic growth was reported at 0.5% (0.7% in Q2, 1.6% in Q1).  The British pound (GBP) has weakened by about 2% against the US dollar over the past year, while the USDGBP exchange rate last traded around 0.63


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