Bank of England’s Non-Event

January 9, 2014

In the case of most central banks, monetary policy meetings are market-moving news-creating events even when no policy modifications are announced.  Statements are released shedding new light on how policymakers see trends evolving and how they might respond, and these are augmented sometimes by press conferences or released macroeconomic projections.  The Bank of England is a notable exception.  99% of the time when its Monetary Policy Committee fails to change policy — as was the case after this week’s two-day meeting — the statement is of a boilerplate variety, stating that policy was not changed, indicating when the last changes were made to the bank rate and quantitative stimulus, and directing the public’s attention to minutes of the meeting for any details on what transpired exactly.  Minutes will arrive on January 22.  Britain’s Bank Rate has been 0.5% since March 2009.  The Asset Purchase Program’s limit was last raised in July 2012, and the GBP 375 billion was reached four months later.  Since August 2013, forward guidance tied to Britain’s labor market and subject to conditions governing inflation has served as the cutting edge of monetary stimulus.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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