Bank Of England Unanimous On Rate, QE
05:58, 14th December 2017
(RTTNews) - The Bank of England policymakers unanimously decided to leave its key interest rate unchanged on Thursday after tightening it for the first time in a decade in November.
The Monetary Policy Committee, headed by Governor Mark Carney, voted to maintain the benchmark rate at 0.50 percent. The bank had raised its rate by a quarter point at the previous session in November.
Policymakers voted unanimously to maintain the quantitative easing at GBP 435 billion.
If the economy performed as estimated in November, the MPC said 'further modest increases' would be warranted over the next few years, in order to return inflation sustainably to the target.
The bank noticed two significant events regarding the macroeconomic outlook since the November meeting. According to BoE, measures announced in the Autumn Budget would reduce the drag on aggregate demand.
Accordingly, the level of GDP would be boosted by around 0.3 percent over the three-year forecast period and inflation would be around 0.1 percentage points higher as a result of the measures.
The second significant event had been the progress made on Brexit talks. This would reduce the likelihood of disorderly exit and would likely support household and corporate confidence, the bank observed.
Inflation rose to 3.1 percent in November. The MPC judged that inflation is likely to be close to its peak, and will decline towards the 2 percent target in the medium term.
The governor will be writing an open letter to the Chancellor to explain this overshoot and this will be published alongside the minutes of the February MPC meeting and the accompanying Inflation Report, the bank said.
The bank said the Committee will monitor closely the incoming evidence on the evolving economic outlook, including the impact of last month's increase in Bank Rate, and stands ready to respond to developments as they unfold to ensure a sustainable return of inflation to the 2 percent target.
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