United Kingdom: Bank of England stays put on interest rates
September 21, 2011
At its 8 September monetary policy meeting, the Bank of England (BoE) maintained the Bank rate at 0.50% and left the asset purchase facility (quantitative easing) unchanged at GBP 200 billion. The decision was broadly anticipated by the market, as prospects for the global economy deteriorate and the domestic economy is weak (Q2 2011: +0.2% quarter-on quarter). All nine members of the Monetary Policy Committee (MPC) voted to keep rates on hold at 0.50%, as in the previous meeting held in August. In addition, one member voted for an additional monetary stimulus, by increasing the asset purchase programme to a total of GBP 250 billion. The next MPC meeting will be held on 5-6 October. The BoE continues to face the dilemma of reining in high inflation without derailing the still fragile economic recovery. For the time being, monetary authorities are likely to maintain the policy stimulus, with a majority of Consensus Forecast panellists in the fourth quarter.