United Kingdom: Bank of England maintains loose monetary policy stance
April 20, 2011
At its latest monetary policy meeting on 7 April, the Bank of England (BoE) left the Bank Rate unchanged at 0.50%, in a decision widely expected by the market. The Bank also left the asset purchase facility (quantitative easing) unchanged at GBP 200 billion. The drop in inflation observed in March along with dismal growth figures have eased pressure on the BoE Monetary Policy Committee (MPC) to take immediate action, although price pressures remain amid rising international commodity prices. That said, as in the previous meetings, three out of nine members of the MPC voted to tighten the monetary policy, the most hawkish being Andrew Stance, who recommended a 50-basis-point increase. Meanwhile, the remaining six members, including BoE governor Mervyn King, voted to maintain the current stance. The BoE maintained its view that inflation would moderate in the medium term, as the impact of the factors temporarily boosting inflation waned. The next MPC meeting will be held on 4-5 May with some analysts, albeit now a minority, anticipating a rate hike.