Bank of England

October 10, 2013

The Monetary Policy Committee (MPC) didn’t change policy settings.  This was the expected result.  The Bank Rate has been 0.5% for over 4-1/2 years, and eleven months have now elapsed since the GBP 375 billion current limit on the Asset Purchase Program was reached.  The U.K. economic recovery has been stronger than imagined, squelching any near-term possibility of further stimulus.  The fairly new BOE Governor, Mark Carney, has had the opposite challenge of containing upward pressure on gilt yields by convincing market skeptics that a start to policy normalization won’t begin sooner than he has implied under forward guidance.  Subject to three caveats laid out August 7, the guidance pledges no tightening before unemployment declines below 7%.  A statement released by the MPC directs the public to meeting minutes to October 23 for details of the committee’s latest thinking.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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