Bank of England

March 17, 2016

The Monetary Policy Committee approved by a unanimous vote to keep the U.K. Bank Rate at 0.50% and leave the Asset Purchase Program ceiling unchanged at GBP 375 billion.  Like Fed officials yesterday, the committee acknowledges external downside risks while observing that domestic economic elements like wages have been evolving much as anticipated.  Inflation is well below the 2.0% target, and core price pressures are subdued.  Expected inflation is well-anchored.  The depressing effect on sterling is noted in a released statement of June’s planned referendum on EU membership.

The MPC’s best collective judgement is that it is more likely than not that Bank Rate will need to increase over the forecast period to ensure inflation returns to the target in a sustainable fashion.   All members agree that, given the likely persistence of the headwinds weighing on the economy, 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 guidance is an expectation, not a promise.

The Bank Rate has been 0.5% since March 2009.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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