UK’s MPC united
(22 January 2010 – UK) The minutes from the Bank of England’s Monetary Policy Committee meeting revealed that members voted in unison to leave British interest rates at record lows with an expectation that inflation would fall.
At the meeting held earlier this month, the nine members of the MPC all agreed to leave the bank’s key interest rate at 0.50 percent; the interest rate has remained at the ‘emergency level’ since March last year.
The BoE is challenged to keep the annual British inflation level close to a government-set target of 2.0 percent. However, despite the minutes revealing that the committee expected the inflation percentage to fall, results released this week showed it had in-fact risen to 2.9 percent.
The increase of the annual inflation rate of 1.0 percent between November and December 2009 is the largest ever increase in the annual rate between two months.
The decision was also made to continue to maintain the bank’s Quantitative Easing (QE) plan in an effort to boost lending by commercial banks and lift Britain out of recession; the bank also plans to continue to pump up to the £200 billion (A$354 billion) benchmark set out under the program.
The BoE’s MPC minutes also revealed that the committee members agreed that recent developments did not provide grounds for substantially changing their views about the medium-term prospects for activity.
Capital Economics analyst, Vicky Redwood, forecast that any change in policy was unlikely at the BoE's next meeting in February.
Ms Redwood also added that the minutes of January's meeting suggested that the committee is unlikely to change policy either way next month, the MPC is still content to look through any near-term rise in inflation and focus on the longer-term effects of the large amount of spare capacity.
The BoE is challenged to keep the annual British inflation level close to a government-set target of 2.0 percent. However, despite the minutes revealing that the committee expected the inflation percentage to fall, results released this week showed it had in-fact risen to 2.9 percent.
The increase of the annual inflation rate of 1.0 percent between November and December 2009 is the largest ever increase in the annual rate between two months.
The decision was also made to continue to maintain the bank’s Quantitative Easing (QE) plan in an effort to boost lending by commercial banks and lift Britain out of recession; the bank also plans to continue to pump up to the £200 billion (A$354 billion) benchmark set out under the program.
The BoE’s MPC minutes also revealed that the committee members agreed that recent developments did not provide grounds for substantially changing their views about the medium-term prospects for activity.
Capital Economics analyst, Vicky Redwood, forecast that any change in policy was unlikely at the BoE's next meeting in February.
Ms Redwood also added that the minutes of January's meeting suggested that the committee is unlikely to change policy either way next month, the MPC is still content to look through any near-term rise in inflation and focus on the longer-term effects of the large amount of spare capacity.
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