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Wednesday, April 25, 2018

Politics

BoE maintains bank rate at 0.25%

Jordan Williams | 9:40 Monday 15th May 2017

The Bank of England’s Monetary Policy Committee (MPC) has voted to keep the bank rate at 0.25%.

At its meeting on the 10th May 2017, the committee voted by a majority of 7-1 to maintain the current bank rate and voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by £10bn worth of the central bank reserves.

The committee also unanimously agreed to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves at £435bn.

A Bank of England spokesperson said: “In the MPC’s central forecast, weaker consumption this year is largely balanced by rising net trade and investment.

“The outlook for global activity continues to improve.”

Business surveys and bank agents’ reports have implied that business investment growth is likely to be higher in 2017 than previously projected.

“The stronger global outlook and the level of sterling are providing incentives for many exporters to renew and increase capacity,” the spokesperson added.

Alix Stewart, fixed income fund manager at Schroders, said: “The Bank of England has made some fairly optimistic assumptions regarding UK growth and the return of wage inflation.

“As the Bank recognises, however, these are based on the UK’s exit from the European Union being smooth.

“Given recent political headlines this is certainly not a given.

“It’s also worth noting that the UK’s economy has been supported since last June’s referendum vote by the Bank’s decision to cut interest rates and extend quantitative easing, as well as by the depreciation of the pound.

“With these factors in mind, it is hard to ascertain the underlying strength of the UK economy at this point.

“So, we remain cautious on how rosy the picture looking ahead really is.”

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