The Bank of England on Thursday left its record low key interest rate and the size of the quantitative easing unchanged.
The Monetary Policy Committee decided to retain the key bank rate at 0.50 percent and the size of asset purchases at GBP 375 billion at the end of the two-day rate setting meeting.
The rate has been at a historic low since March 2009. The previous change in quantitative easing was an increase of GBP 50 billion in July 2012.
The central bank is set to publish its latest quarterly inflation report, which will contain its economic projections, on May 13.
An open letter from the BoE Governor Mark Carney to the Chancellor of the Exchequer will also be released along with the report as the country’s inflation has undershot the 2 percent target by more than 1 percent for three months running, the recent figure being zero percent for March.
The bank is set to release the minutes of the latest rate-setting session on May 20. In April, the nine-member Monetary Policy Committee unanimously decided to retain the key rate and the size of the quantitative easing.
The minutes of the April meeting showed that policymakers acknowledged the signs of strengthening of the euro area, which could benefit the UK economy in the long run, and assessed that domestic inflation could pick up faster later on after remaining negative in the coming months.
“Now that the political uncertainty has cleared the BoE can focus once again on the data, which in general shows an economy that is performing well with little near-term inflation threat. Indeed, wage growth remains modest and headline inflation is at zero,” ING Bank economist James Knightley said.
“We wouldn’t be surprised to see the BoE nudge up their inflation forecasts on Wednesday and perhaps emphasise a little more forcibly that the prospect of interest rate rises is getting closer.”
The material has been provided by InstaForex Company – www.instaforex.com