BoE Leaves Monetary Policy Unchanged
The Bank of England left the Bank Rate on hold at a record low 0.5 percent on June 4th as widely expected. The size of the Asset Purchase Programme was left unchanged at £375 billion.
Markets do not expect the central bank to start raising rates until 2016. Although unemployment rate fell to a nearly 7 year-low of 5.5 percent in the three months to March, inflation touched a record low of -0.1 percent in April, remaining well below the bank’s 2 percent target. In addition, the economy expanded only 0.3 percent in the first three months of 2015, the lowest growth rate since 2012.
In May, policymakers revised down its growth estimates for the next three years and signaled a rate rise may not occur until mid-2016. 2015 growth forecast was lowered from 2.9 percent to 2.5 percent while projections for 2016 and 2017 were also lowered by 30 basis points to 2.6 percent and 2.4 percent respectively. Regarding inflation, policymakers increased its 2015 forecast to 0.6 percent from 0.5 percent and cut the 2016 estimate to 1.6 percent from 1.8 percent. 2017 forecast was left unchanged at 2.1 percent.
The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The previous change in the size of that programme was an increase of £50 billion to a total of £375 billion on 5 July 2012.
6/4/2015 3:53:35 PM