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Bank of England Holds Rate at Record-Low, Will Increases Asset Purchase by GBP 50B to GBP 125B

Thursday, 07 May 2009 11:10:58 GMT  |  David Song, Currency Analyst, Geng Chen, DailyFX Research

The Bank of England held the benchmark interest rate steady at the record-low of 0.50%, but increased the size of its asset purchase program by GBP 50B to a total of GBP 125B as the central bank expects inflation to ‘drop below the 2% target later this year, driven in part by diminishing contributions from food and energy prices.’

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GBPUSD – The Bank of England held the benchmark interest rate steady at the record-low of 0.50%, but increased the size of its asset purchase program by GBP 50B to a total of GBP 125B as the central bank expects inflation to ‘drop below the 2% target later this year, driven in part by diminishing contributions from food and energy prices.’ Moreover, policymakers went onto say that it will take another three-months to complete the program however, the MPC noted that the global economy ‘remains in a deep recession’ and that the financial system remains fragile. Discuss the topic and your trade ideas in the GBP/USD Forum.

EURUSD – German factory orders rose for the first time in seven months as the index unexpectedly increased 3.3% in March after falling 3.1% in the previous month, while the annualized reading improve to -26.7% from a revised reading of -38.0% in February. The detail of the report showed export order jumped 5.6% during the month, which was followed by a 1.1% rise in domestic demands. Discuss the topic and your trade ideas in the EUR/USD Forum.

CHFUSD – Price growth in Switzerland accelerated more than forecast in April as the consumer price index rose 0.9% amid expectations for a 0.6% rise. Meanwhile, the annual rate of inflation increased to -0.3% from a half century low of -0.4% in the previous month, and the breakdown of the report showed that prices for clothing and shoes surged 17.8%, while the transports prices rose 1.1% as oil prices pushed higher. However, as the headline reading for inflation remains in negative territory, the data reinforces SNB Chairman Jean Pierre Roth's warning that the economy is "on the edge of a deflationary development". As a price pressures falter, the central bank may continue to intervene in the currency markets in order to stem the appreciation in the Swiss franc as policymakers attempt mitigate the downside risks for growth and inflation. For more news and resources, visit the new Swiss franc Currency Room.

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