By www.CentralBankNews.info The Bank of England (BOE) maintained its Bank Rate at 0.5 percent and the size of its asset purchases at 375 billion pounds, adding that it would release its latest inflation and output projections on August 7.
The BOE, which has held its rate steady since March 2009, also said that its Monetary Policy Committee, as already announced, “will also respond to the UK Chancellor’s request for its assessment of the use of thresholds and forward guidance at that time.”
The decision to maintain rates and the size of its asset purchase program was widely expected following the release of the minutes from the MPC’s July meeting in which it became clear that the size of the quantitative easing program would likely be maintained while the bank decides on the details of its forward guidance under its new governor, Mark Carney.
Following Carney’s first meeting in July, the BOE used a mild form for policy guidance, voicing concern over the recent rise in UK bond yields, saying this was weighing on its economic outlook and the implied rise in its bank rate was not warranted by economic developments.
Bond yields in the UK and in most other countries rose in June following better UK economic data and in reaction to the Federal Reserve’s planned tapering of its asset purchase program.
Inflation in the United Kingdom rose to 2.9 percent in June from 2.7 percent in May, continuing to remain above the BOE’s target of 2.0 percent.
The UK economy strengthened in the second quarter with Gross Domestic Product up by 0.6 percent from the first quarter, for annual growth of 1.4 percent, up from 0.3 percent in the first.