U.K. Rates Stay Unchanged

May 8, 2008

The Monetary Policy Committee of the Bank of England, which earlier had implemented rate cuts in Dec, Feb and April of 25 basis points each, left its benchmark bank rate at 5.0%. This is the result investors expected, although a risk of another rate reduction had grown in recent days amid soft British data. The BOE’s quarterly inflation report due on May 14 will pre-announce likely additional rate reductions in coming months, and minutes of today’s meeting due May 21 will include at least one dissenting vote in favor of not waiting longer to ease. It would not be surprising if Mr. Blanchflower had pressed for a reduction this month of 50 bps as he did in April.

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