BoE policy makers voted 9-0 to keep interest rates on hold
Minutes of the Bank of England’s October meeting have been released today and have revealed that the Monetary Policy Committee (MPC) voted unanimously this month to keep interest rates at the historic low of 0.5%.
Furthermore, the MPC voted 9-0 to leave its quantitative easing programme unchanged at £175 billion and said it would not extend it but added that it would keep it “under review”.
The decision not to inject more money was seen as a positive sign that the UK economy was recovering and did not need further help from the bank.
Ian Stannard, foreign exchange strategist at BNP Paribas, said: “The minutes suggested confidence in the recovery.”
As the minutes were digested, the pound rose 1% against the US dollar to $1.6563.
Meanwhile with regard to inflation, the minutes said it is expected to be volatile in the short-term. “Pre-release data indicated that CPI inflation had fallen significantly in September. But it was likely to pick up in coming months as base effects from movements in petrol prices a year earlier fed through and in response to the prospective reversal of the cut in VAT,” the minutes said.
In other news, the Office for National Statistics (ONS) revealed yesterday that public sector borrowing rose by £14.8 billion in September.
Net borrowing for the first half of the financial year now stands at £77.3 billion – the worst figure for the April to September period on record.
This may result in the Government having to review its forecast upwards to £200 billion, rather than the £175 billion it is predicting, according to many analysts.
Overall debt now stands at £824.8 billion – the equivalent of 59% of GDP.
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