Bank of England Stays in Wait and See Mode

October 8, 2015

The Bank of England Monetary Policy Committee again voted 8-1 to leave the Bank Rate at 0.5%, its level since March 2009, and unanimously to retain a GBP 375 billion limit on its Asset Purchase Program.  This was the expected outcome.  The majority observed zero CPI inflation, core inflation of around 1%, continuing spare capacity, a flattening out of unemployment, and international risks.  Once rate normalization begins, the majority anticipates it will be a gradual process but does not guarantee that promise.  Rates will be guided ultimately by the evolution of data and other pertinent information.  Ian McCafferty again dissented in favor of a 25-basis point interest rate hike, asserting that rising domestic cost pressures outweighing the disinflationary effect of the strengthening exchange rate and leading ultimately to an overshoot of the 2% inflation target in the medium term.

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

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