Bank of England
May 11, 2017
The Monetary Policy Committee kept its Bank Rate at 0.25% and did not modify the limits of its quantitative stimulus. As she had done at the prior meeting in March, Kristin Forbes cast a sole dissenting vote in favor of hiking the interest rate to 0.50%, which resulted in a 7-1 verdict. A statement of explanation foresees CPI inflation rising further near term and staying somewhat above the 2.0% medium-term target throughout the forecast period horizon though eventually heading in the right direction. The statement reiterates the argument that justifies allowing above-target inflation to persist awhile in order to forestall an excessive deceleration in income and GDP growth.
By the same token, officials again warn that this trade-off will not be maintain of developments suggest that inflation isn’t likely to recede back to target, and officials in fact an additional alert is given that rates may rise more than investors now think: “if the economy follows a path broadly consistent with the May central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the very gently rising path implied by the market yield curve underlying the May projections.”
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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