Summary:
BoE keeps interest rates unchanged at 0.25%, with a 7 -1 vote
BoE keeps asset purchases steady at £435 billion
Inflation expected to overshoot BoE’s inflation target well into 2018
2017 inflation forecast at 2.7%; GDP growth expected at 1.7%
The Bank of England’s monetary policy meeting yesterday on 11th May saw the 8-member monetary policy committee voting 7 – 1, to leave interest rates unchanged at record lows of 0.25%. The BoE cut rates in August 2016.
Kristen Forbes, BoE policymaker once again voted for a 25 basis point rate hike. Policy makers, however, voted unanimously to keep the asset purchased steady at £435 billion.
The Bank of England said that the monetary policy remained appropriate and that continuing stability of the monetary policy would depend on a mix of factors that include inflation and slack in the economy. Inflation continues to overshoot the BoE’s inflation target of 2%.
The BoE had a slightly hawkish tilt in noting that monetary policy could be tightened should there be evidence of economic growth. In this case, the central bank said that monetary policy would be tightened by a greater extent.
Speaking at the press conference, BoE Governor, Mark Carney said that wage growth remained weak and with a contrasting increase in consumer prices, households are expected to feel the squeeze. The central bank chief, however, said that wage growth could be expected to pick up eventually.
Read full article: https://www.orbex.com/blog/2017/05/may-boe-meeting-recap-no-change-policy-wage-growth-flagged-risk/