Bank of England Keeps Foot on the Accelerator
November 5, 2009
The Bank of England
- Left its Bank Rate at 0.5%, the level since March and down from 5.0% since the start of October 2008 and a peak of 5.75% prior to December 2007.
- Extended the purchases of government and corporate debt by Gbp 25 billion to Gbp 200 billion, to be completed by February.
A statement from the Monetary Policy Committee projected a return to positive growth soon but warned that the recovery would be “slow” and that the persistence of “substantial under-utilized resources will “continue to bear down on inflation from some time to come” even though special factors in the very near term are likely to boost the CPI temporarily back above the 2% target from 1.1% as of September. Consistent with a new quarterly Inflation Report that the central bank will be releasing on November 11, it was deemed “appropriate” to take today’s actions in order to achieve medium-term inflation of 2%, not something lower than that target. The statement said that financial conditions, although improving, “remain fragile.”
Analysts had expected the rate decision but been split over whether the asset purchase plan would be extended at all, lifted by Gbp 25 billion or raised by Gbp 50 billion.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
Tags: Sterling
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