Bank of England Preview: No Changes Likely

February 6, 2013

January committee meeting minutes had a slightly more hawkish tone and indicated reservations about possible collateral damage of ever-increasing quantitative easing.  Moreover, sterling’s modest depreciation in recent months constitutes some modest easing of monetary conditions delivered in a more innocuous manner.  Global and regional growth prospects and financial conditions have improved since 4Q12.  The Bank of England is in transition, awaiting the installation of Mark Carney as Governor a few months from now.  British inflation ended 2012 at 2.7%, thus closer to 3% than the targeted 2%. It will take a much bigger deterioration of activity and drop in inflation than exists now to produce a majority of committee members sanctioning a rise in asset purchases from its present limit of GBP 375 billion.  The Bank Rate has been 0.5% since March 2009.  Tomorrow’s announcement is set for 12:00 GMT.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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