Bank of England

September 10, 2015

The Monetary Policy Committee left Its 0.50% Bank Rate as is by a vote of 8-1 and unanimously voted not to change the GBP 375 billion ceiling on the Asset Purchase Program.  The interest rate has been 0.50% since March 20009, and the last change of the APP was made in July 2012 and completed by the following November.  A released statement called the policy stance “appropriate” and makes the following points:

  • “Inflation is below the target and the Committee’s best collective judgement is that there remain at least some underutilised resources in the economy.”
  • “The aim of returning inflation to the target within two years was thought likely to be achieved conditional upon Bank Rate following the gently rising path implied by the market yields prevailing at the time.”
  • Downside growth risks have increased somewhat since the last policy meeting.  Trends in emerging economies like China were cited as long as financial market and commodity price volatility.
  • “Domestic momentum is being underpinned by robust real income growth, supportive credit conditions, and elevated business and consumer confidence.  The rate of unemployment has fallen by over 2 percentage points since the middle of 2013, although that decline has levelled off more recently.”
  • “Ian McCafferty preferred to increase Bank Rate by 25 basis points, given his view that building domestic cost pressures would otherwise be likely to lead to inflation overshooting the target in the medium term.”
  • “When Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles.”  This is a forecast, not a promise.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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