LOSING CURRENCY

Finland’s main business union blames the fourth year of contraction on a failure to adjust to the euro environment.

LONDON: Currency traders’ verdict on the Bank of England’s latest policy meeting was that officials had failed to offer more insight into the path of interest rates and to shift the outlook for sterling.

The pound’s initial decline after the meeting’s minutes were published on Thursday was short-lived, and Britain’s currency swung between gains and losses versus the dollar for much of the afternoon.

The central bank’s nine-member Monetary Policy Committee voted 8-1 to keep borrowing costs at a record-low 0.5% in its last decision of the year, sticking to the status quo. Officials said low oil prices and subdued wage growth would keep a lid on inflation, similar to remarks from last month.

While assessing when to raise rates for the first time since July 2007, bank officials have been weighing the strength of Britain’s economy against slowing global growth, including a slump in emerging markets and tumbling commodity prices.

Recent data provide a mixed outlook for the British economy, with services output increasing last month, while house prices fell and manufacturing production declined more than analysts forecast.

“Expectations at the start of this year were calling for higher wages, inflation and interest rates,” said Neil Jones, head of hedge fund sales at Mizuho Bank. “In essence, lower oil prices have pushed back inflation and interest-rate expectations — that’s the bottom line for another 8-1 vote. The trend should be towards at least 6-3 by now.”

Traders are betting officials will keep the rate unchanged through 2016.

There would need to be a sustained firming in domestic cost pressures to push inflation back to the 2% target, Bank of England officials said.”