BOE Votes 7-1 to Keep Interest Rates at 0.50 Percent
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GBPUSD: The Bank of England voted 7-1 to keep rates unchanged at 0.50 percent, while all members elected to maintain the stock of asset purchases at 200 billion pounds. This is the second straight month that one member, Andrew Sentence, voted for a rate hike of twenty five basis points. Sentence argued that inflation “had shifted sufficiently to justify beginning to raise interest rates gradually.” Meanwhile, policy makers stated that while it was “too early” to fully assess the implications of the budget for inflation, the planned value-added tax increases would probably add to consumer price growth in 2011. In turn, we may see inflation remain above the central bank’s target of 3 percent for some time. Going forward, the Bank of England may maintain its wait and see approach as the global economy continues to face major headwinds in its recovery. To discuss this and other topics, please visit the GBP/USD forum.
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Written by Michael Wright, Currency Analyst
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