United Kingdom: Bank of England leaves interest rates unchanged
June 22, 2011
At its monetary policy meeting on 9 June, the Bank of England (BoE) maintained the Bank Rate at 0.50% and also left the asset purchase facility (quantitative easing) unchanged at GBP 200 billion. The decision was broadly anticipated by the market, as economic growth remains subdued. Seven out of the nine members of the Monetary Policy Committee (MPC) voted to keep rates on hold at 0.50%, including BoE governor Mervyn King and the new member of the MPC, Ben Broadbent, who replaced Andrew Sentance, the most hawkish member. Two members of the MPC voted to tighten monetary policy by 25 basis points. The next MPC meeting will be held on 6-7 July. A majority of Consensus Forecast panellists anticipate a 25 bps rate hike to take place in the third quarter. As the Bank of England faces the dilemma of reining in high inflation without derailing the still fragile economic recovery, any move will require careful consideration.