United Kingdom Monetary Policy April 2016

United Kingdom

United Kingdom: BoE keeps the Bank Rate unchanged at 0.50% in April

April 14, 2016

At its 14 April meeting, the Monetary Policy Committee (MPC) of the Bank of England (BoE) decided to keep the Bank Rate on hold at 0.50% and to leave the stock of asset purchasing at GBP 375 billion. Both decisions met market expectations. As in the previous month, the Committee voted unanimously on the proposals for keeping both the Bank Rate and the stock of asset purchasing unchanged.

The BoE commented that the British economy likely decelerated slightly in the first quarter as uncertainty regarding the EU referendum most probably weighed on economic activity. The Bank emphasized that, “referendum effects are likely to make macroeconomic and financial market indicators harder to interpret over the next few months, and the Committee is likely to react more cautiously to data news over this period than would normally be the case.”

Regarding price developments, the MPC commented that the inflation outlook has not changed much since March’s meeting and that inflation remains well below its target broadly due to low prices for energy and food. The Central Bank also added that, “returning inflation to the 2% target requires balancing the potentially lessening drag from external factors against expected gradual increases in domestic cost growth.” The sterling has depreciated further in the recent weeks. The currency has been negatively affected by the uncertainty surrounding the forthcoming referendum on the EU membership.

FocusEconomics Consensus Forecast panelists expect the Bank Rate to end 2016 at 1.09%. For 2017, the panel sees the Bank Rate ending the year at 1.66%.

Author:, Senior Economist

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United Kingdom Monetary Policy Chart

United Kingdom Monetary Policy April 2016

Note: Asset Purchase Facility (APF) in GBP billion and Bank Rate in %.
Source: Bank of England (BoE).

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