Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Bank of England holds rates at record low but surprises with 3 dissents

Economy Jun 15, 2017 07:02AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. BoE holds on rates but 3 members call for 25 basis point hike
 
GBP/USD
-1.39%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EUR/GBP
+0.37%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/JPY
+0.59%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
UK100
+1.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FCHI
+0.94%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DE40
-0.21%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investing.com – As expected, the Bank of England (BoE) decided on Thursday to keep interest rates unchanged at a record low as well as to make no changes to its asset purchase program, though members of the Monetary Policy Committee (MPC) surprised markets with three dissents

Specifically, the BoE left the benchmark interest rate at a record low of 0.25%, in line with market forecasts.

The decision to maintain interest rates was undertaken in a vote with 5 members in favor and 3 opting for a 25 basis-point rate hike.

The vote surprised markets that had expected a vote of 7-1.

Furthermore, all MPC members agreed to leave its asset purchase program unchanged as expected at £435 billion as well as to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion.

The BoE noted the recent rise in inflation to 2.9% and indicated that it expect it to continue to accelerate.

“Inflation could rise above 3% by the autumn, and is likely to remain above the target for an extended period as sterling’s depreciation continues to feed through into the prices of consumer goods and services,” the BoE said in the release.

“The 2.5% fall in the exchange rate since the May Inflation Report, if sustained, will add to that imported inflationary impetus,” it added.

The BoE further pointed to the decline in GDP growth in the first quarter and said that it was due in part to weaker household spending.

“It remains to be seen how large and persistent this slowdown in consumption will prove,” the BoE said.

The MPC also took note of uncertainty as the U.K. continues to move forward with its plans to leave the European Union (EU).

“Monetary policy cannot prevent either the necessary real adjustment as the United Kingdom moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany that adjustment over the next few years,” it explained.

The BoE further warned that it could offset the effect of weaker sterling on inflation at the cost of higher unemployment and, “in all likelihood, even weaker income growth”.

“For this reason, the MPC’s remit specifies that, in such exceptional circumstances, the Committee must balance any trade-off between the speed at which it intends to return inflation sustainably to the target and the support that monetary policy provides to jobs and activity,” it explained.

Investors will undoubtedly look for further details at 4:00PM ET (20:00GMT) when BoE governor Mark Carney will deliver a speech at the Mansion House Merchants and Bankers dinner.

Following the release, the pound bounced back from earlier losses caused by weak retail sales data. GBP/USD traded at 1.2777 from around 1.2699 ahead of the publication, EUR/GBP was at 0.8729 from 0.8792 earlier, while GBP/JPY traded at 140.66 compared to 139.31 before the announcement.

Meanwhile, European stock markets traded lower. London’s FTSE 100 fell 1.16%, the Euro Stoxx 50 lost 1.18%, France's CAC 40 traded down 1.03%, while Germany's DAX shed 0.90%.

Bank of England holds rates at record low but surprises with 3 dissents
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email