Bank of Eng­land keeps rates steady

The Pak Banker - - FRONT PAGE -

The Bank of Eng­land voted to keep in­ter­est rates at their record low of 0.5 per cent on late Thurs­day and cut its fore­casts as a slow­down in global growth and mar­ket volatil­ity cast un­cer­tainty over the coun­try's out­look.

The unan­i­mous vote on the nine-mem­ber Mon­e­tary Pol­icy Com­mit­tee on Thurs­day re­in­forces in­vestors' ex­pec­ta­tions that the bank will not be able to raise in­ter­est rates as soon as it had ex­pected un­til re­cently. Some be­lieve it may have to cut rates in­stead.

"Global growth has fallen back fur­ther over the past three months, as emerg­ing economies have gen­er­ally con­tin­ued to slow and as the US econ­omy has grown by less than ex­pected," the pol­icy com­mit­tee said in a state­ment. "There have also been con­sid­er­able falls in the prices of risky as­sets and an­other sig­nif­i­cant fall in oil prices."

With in­fla­tion at 0.2 per cent - far below the 2 per cent tar­get rate - there's lit­tle pres­sure to raise rates. Some ob­servers have sug­gested the bank might con­sider low­er­ing rates, fol­low­ing in Ja­pan's foot­steps.

In its quar­terly up­date to eco­nomic fore­casts - pub­lished along­side the pol­icy de­ci­sion and the min­utes to the meet­ing - the Bank of Eng­land down­graded its growth fore­casts.

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