MPC HOLDS RATES…………FOR NOW

Bank of England’s Monetary Policy Committee (MPC) today left Bank Rate and QE unchanged, as widely if not universally expected. What was unexpected was the latest “forward guidance” that the next rate increase is likely to happen sooner than later in a bid to tackle inflation. The change here, as Governor Mark Explained, is that inflation is likely to remain over the target level of 2% for longer than previously envisaged.

Now there was a time when the Bank felt able to “look through” inflation levels of 5% in the firm belief that it would be a short term situation. Here the MPC were unanimous in voting to take action sooner than later if the situation warranted. In the press conference that followed the Bank’s announcement, Mr Carney was asked if today was an appropriate time to herald a rise in rates, given the recent falls in equity and bond markets and the seeming negative effect that Brexit was having on the UK economy. A good question, it seemed, but tackling inflation appears to be the overriding concern now, not economic growth.

So the markets immediately priced in an increase in Bank Rate for August but given the MPC’s recent track record of not following the timing of its own forward guidance, the next MPC meeting in May will likely command more interest than usual.

  • Bank Rate

    Error parsing: Query returned empty response
  • FTSE 100

    7,730.28
    13.54 (0.18%)
    Day high
    7,753.32
    Day low
    7,703.26

    FTSE 100 delayed by at least 15 minutes | Preferences

  • Search

    RECENT NEWS

    MPC HOLDS RATES…………FOR NOW

    February 8, 2018

    Bank of England’s Monetary Policy Committee (MPC) today left Bank Rate and QE unchanged, as widely if not universally expected. What was unexpected was the latest “forward guidance” that the next rate increase is likely to happen sooner than later … Continue reading

    CONTACT US

    London Money Market Association,
    Warnford Court, 29 Throgmorton Street, London, EC2N 2AT
    Email: itmconsulting@btinternet.com
    Telephone: 020 7947 4916 (Switchboard)
    General Enquiries/Media
    Ian Mair - Chairman
    Email - itmconsulting@btinternet.com