The Bank of England’s Monetary Policy Committee (MPC) met today and chose to leave interest rates unchanged at 0.50 percent and retain its monthly bond purchases or quantitative easing program at 375 billion pounds. The Central bank has left the interest rates unchanged at record lows for close to 5 years on the trot, since it last decision to tamper with the rates in March 2009.
The impact of the policy decision was muted as a majority of analysts had predicted a no- change in stance. According to the forward guidance policy adopted by the Central bank in August last year, interest rates would not be hiked until unemployment rate falls below 7 percent. The unemployment figures released last month point to a fall in jobless rate to 7.1 percent in the three months ending November last year, much faster than earlier predicted, raising hopes of an interest rate increase sometime this year.
Inflation has been on the decline steadily and for the first time since November 2009, the annual rate of inflation fell to 2 percent in December last year, in line with the Central bank’s set target. The bank is expected to publish its quarterly inflation report on Feb 12th and the minutes of today’s policy meeting on Feb 19th. Pound Sterling remained more or less flat after the monetary policy data was released, oscillating between $1.6270- 1.6310, before extending its gains on the back of gains in the EURO. At 5PM GMT, Sterling was seen trading at 1.6330 to the greenback, slightly higher from Wednesday’s close of $1.6307 The Monetary Policy Committee is due to meet next on March 6th to decide the next course of action.