Bank of England: No Changes

October 8, 2009

The Monetary Policy Committee releases a short statement with no commentary about economic conditions after deciding to retain its benchmark rate at 0.5% and to make no further adjustments to the asset buying plan.  The key interest rate has been at 0.5% since March.  That was when a Gbp 75 billion asset purchase program was announced initially.  The plan was raised to Gbp 125 billion in May and by another Gbp 50 billion to Gbp 175 billion in August.  The full Gbp 175 billion will be completed by November, when I expect monetary officials to extend the ceiling yet again.  The latest thinking of officials will be revealed in minutes of today’s meeting due October 21st.  Most analysts had not been looking for any changes at the October meeting, although a few thought an increase in the asset buying plan was possible.

Sterling has settled back a half-cent to $1.6044 compared to its overnight high of $1.6093 in mild disappointment at the lack of further announcements regarding quantitative easing.  Nonetheless, it remains above $1.6000, its recent pivot.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.



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