Bank of England Policy Left Unchanged

January 7, 2010

The Bank of England’s policy announcement at 12:00 GMT today sprung no surprises.  The Bank Rate remains at 0.5% where such has been since a 50-bp cut last March.  The asset purchase program ceiling of Gbp 200 billion was not changed has one further month to get completed.  A statement from the Monetary Policy Committee reports that minutes from today’s meeting will be published on January 20 but includes no text about economic conditions or possible future policy decisions.  I believe a unanimous 9-0 vote lies behind today’s decisions.  Minutes from the December policy meeting indicated that officials consider their policy stance to be extraordinarily accommodative.  Please see my preview of today’s meeting posted Wednesday for more background on the British economy.  As noted there, the situation is complicated, with arguments for stopping quantitative easing at the Gbp 200 billion level slightly more compelling than counter-arguments to provide additional support. Today’s release of car sales and the Halifax house price index accentuate the positive trends in Britain and are further reasons why the central bank is more likely to pause policy next month than to boost the asset purchase program further.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



Comments are closed.