Bank of Eng­land to keep pol­icy steady

The Pak Banker - - Front Page -

LONDON: The Bank of Eng­land (BoE) looks set to keep its ul­tra-loose mon­e­tary pol­icy un­changed in De­cem­ber in the face of coun­ter­vail­ing pres­sures from ris­ing in­fla­tion and euro zone fi­nan­cial turmoil.

The nine-strong Mon­e­tary Pol­icy Com­mit­tee meets on Wed­nes­day and Thurs­day, and most pol­i­cy­mak­ers are likely to keep a firmly neu­tral bias as an un­ex­pected up­ward move in in­fla­tion weak­ens the case for tack­ling grow­ing threats from the euro zone. None of the more than 60 econ­o­mists polled by Reuters last week ex­pected a change to the cur­rent pol­icy mix of 0.5 per­cent in­ter­est rates and 200 bil­lion pounds of as­set pur­chases that has been in place since Fe­bru­ary this year. The break­down of the vote --which will be pub­lished on De­cem­ber 22 with the min­utes of the MPC meet­ing --is also ex­pected to re­main un­changed from Novem­ber, as there has been no ma­jor shift to the eco­nomic out­look since the Bank pub­lished its quar­terly in­fla­tion re­port last month.

More­over MPC mem­bers An­drew Sen­tance and Adam Posen both said in re­cent weeks that they in­tended to stick with their re­spec­tive mi­nor­ity calls for a 25 ba­sis point rise in in­ter­est rates and a 50 bil­lion pound in­crease in quan­ti­ta­tive eas­ing. "The Bank has rel­e­gated pol­icy changes to quar­terly in­fla­tion re­port months," said Lloyds econ­o­mist David Page. "The in­fla­tion re­port and min­utes clearly show that the Bank has switched into neu­tral." The in­fla­tion re­port fore­cast that con­sumer price in­fla­tion would fall back be­low its 2 per­cent tar­get by 2012, once the ef­fect of next year's rise in value-added tax for most goods and ser­vices has faded away. Data since the re­port was pub­lished showed that in­fla­tion ticked up to 3.2 per­cent in Oc­to­ber from 3.1 per­cent in Septem­ber, and that pub­lic in­fla­tion ex­pec­ta­tions were start­ing to rise. -PB News

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