The Bank of England’s two day policy meeting is over and the Monetary Policy Committee has decided not to purchase any further bonds at the present time.
As widely predicted by economists the MPC, under the leadership of Governor Mervyn King, chose not to expand its bond-buying scheme beyond the 375 billion pounds already bought. The BoE’s benchmark interest rate was also held at the unprecedented low of 0.5 per cent.
Founder of Capital Economics Ltd Roger Bootle commented: ‘The outlook for the UK economy is still uncertain.’ Bootle, who was a UK Treasury advisor at one time, continued: ‘I suspect the fourth quarter is going to be weak, and if that’s the case the discussion will come back to Quantitative Easing. I think we’re on course for more QE in the New Year’.
Industry experts are viewing today’s decision as a way for the BoE to encourage growth by devoting more time to credit-boosting measures, like the Funding for Lending Scheme. Many also feel that the recent stream of weak UK economic data and heightened inflationary concerns could have contributed to the decision.
Following the decision economists with Barclay’s were quoted as saying: ‘The widespread expectation of unchanged policy marks a sharp turnaround from forecasts just a few weeks ago that QE would be expanded. This is partly due to evidence of firmer inflationary pressures.’
After the announcement met general expectations Sterling was able to trim recent loses against the US Dollar.
As of 13:35
The Pound to Euro exchange rate is currently trading at 1.2489
The Pound to US Dollar exchange rate is currently trading at 1.5976
The Pound to Australian Dollar exchange rate is currently trading at 1.5322
The Euro to US Dollar exchange rate is currently trading at 1.2789
The Euro to Pound exchange rate is currently trading at 0.8003
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