United Kingdom: BoE keeps the Bank Rate on hold
October 23, 2013
At its 8-9 October meeting, the Monetary Policy Committee (MPC) maintained the Bank Rate at 0.50% and the stock of asset purchasing at €375 billion. The Committee made both of the decisions unanimously. According to the Bank, the economy gained momentum in the first half of the year. The improvement mainly reflected diminishing "perceived tail risks in the euro area" as well as an easing of credit conditions. In addition, the decrease in mortgage rates is expected to be an important factor in the revival of the housing and mortgage market in 2014. Regarding price developments, the Bank acknowledged that the recent appreciation of the currency will put downward pressure on inflation, "reducing the likelihood of inflation being above 2.5% at the 18-24 month period relevant to the MPC's forward guidance 'knockout'." All of the FocusEconomics Consensus Forecast panelists expect the BoE to leave interest rates unchanged at 0.50% this year. For next year, the majority of panelists expect the BoE to stay put, resulting in a year-end projection of 0.54%.
Author: Dirina Mançellari, Senior Economist