United Kingdom: Bank of England maintains monetary policy stance for now
February 17, 2011
At its latest monetary policy meeting held on 9 and 10 February, the Bank of England (BoE) left the Bank Rate unchanged at 0.50% and maintained the size of the asset purchase programme (quantitative easing) at the current GBP 200 billion, in a decision widely expected by market analysts. Moreover, on 16 February, one day after the official release of January inflation data, the BoE presented its quarterly inflation report. In the report, the Bank acknowledged that inflation is likely to pick up to between 4% and 5% in the near term but maintained its position that the elevated rate of inflation reflects a number of factors, the impact of which are likely to be temporary. Nevertheless, the BoE raised its inflation expectations for this year from 2.8% in November to 4.3%. Amid rising inflation, disagreements within the Monetary Policy Committee (MPC) are surfacing, which suggest that the tightening cycle may begin sooner than previously expected. In fact, three out nine members of the Monetary Policy Committee (MPC) voted against maintaining the Bank rate at 0.50%, proposing instead to raise it by as much as 50 basis points.