The British central bank, the Bank of England decided today to leave its key interest rate, the base rate, unchanged at 0.50 percent. The decision was in line with analysts’ expectations.
The Bank of England.
The central bank announced at the same time that the program of asset purchases remains unchanged at 375 billion pounds, which is also in line with analysts’ expectations.
Members of the Bank of England voted on the question of interest according to the numbers 9-0. Expectations were that the poll would be 9 for an unchanged interest rate and 0 for the increase, according to Dow Jones Newswires.
While voting regarding asset purchases was unanimous.
According to the Protocol, the EU-vote lead to weaker growth in the first half. There are signs that investment and hiring decisions postponed in view of the vote while the statistics are difficult to interpret. It also means that the Monetary Policy Board will be more careful in the reactions to the statistics.
The US GDP growth has been disappointing offset by decreasing risks from China and the Executive Board expects the subdued global growth continues. The outlook for US growth in the second quarter is more encouraging and the prices of riskier assets suggests that risk appetite has returned, which can reflect the more positive global data and central bank monetary policy.
Furthermore, stronger oil prices and the weaker pound help provide support to inflation.
the monetary policy Board believes that it is more likely that interest rates will need to be adjusted during the forecast period, than it does not need to be raised, in order to ensure that inflation continued to look out to return to the target in a lasting way.
All members agree that, given the persistent headwinds are weighing on the economy, when the policy rate well starts to rise, it is expected to occur more gradually and at a lower level than in the past cycles.
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