-BOE Leaves Bank Rate On Hold At 0.5%; QE Stock At Stg375 Billion
LONDON (MNI) – The Bank of England Monetary Policy Committee voted
at its December meeting to keep the stock of asset purchases at stg375
billion, the fifth month in a row it has chosen not to extend QE.
The QE decision was widely anticipated, and the MPC also went
through its monthly ritual of announcing Bank Rate has been left on hold
at 0.5%, with Bank Rate cut to 0.5% back in March 2009 and left there
ever since. As usual, the MPC made no statement to justify an unchanged
policy decision.
Since bringing Bank Rate down to 0.5%, the MPC has not treated it
as an active policy instrument, taking the view that the costs of
bringing it even closer to the zero bound would likely outweigh the
benefits.
The prolonged period of flat Bank Rate looks set to be extended for
a long while yet.
The minutes over the November MPC meeting said that Bank staff work
showed a rate cut would hit the profitability of some lenders, which may
restrict lending, and “the Committee judged that it was unlikely to wish
to reduce Bank Rate in the foreseeable future.”
At the November meeting the MPC, having completed its quarterly
forecast round, voted eight-to-one in favour of keeping QE at stg375
billion, with only David Miles dissenting and going for a stg25 billion
extension.
The next key policy date is February, when the MPC will have
carried out its next forecast round. A minority of analysts are
predicting QE could be extended then, while the January meeting is seen
as another foregone conclusion.
-London newsroom: 4420 7862 7491 email: drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
