Bank of England in Wait and See Mode as Expected

October 4, 2012

The Monetary Policy Committee decided not to change the GBP 375 billion size of its Asset Purchase Plan.  An announced increase at its July meeting of GBP 50 billion will not be fully implemented until next month.  A statement on the Bank of England web site gives no information about the committee’s latest views and instead directs the public to watch for published minutes of this week’s meeting due on October 17.  Background to today’s meeting can be read in my earlier posted preview.

The Bank of England’s main interest rate was cut from 5.75% at the start of December 2007 to 5.0% by April 2008 and then slashed to 0.5% in six moves between October 2008 and March 2009.  Declaring the rate then to be at a feasibly safe floor, monetary officials in March 2009 introduced quantitative easing, that is their Asset Purchase Program, which has been gradually expanded as conditions have warranted.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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