By CentralBankNews.info
The Bank of England (BOE) maintained its Bank Rate at 0.5 percent, as widely expected, along with its current stock of assets at 375 billion pounds as reinvests 8.1 billion of cash it received from the redemption of one of its bonds.
The BOE has held its Bank Rate at the current level for five years since March 2009 and is expected to maintain it for about another year before raising it to control inflation from the growing economy.
In addition to cutting its rate in March 2009, the BOE also embarked on so-called quantitative easing by purchasing assets to hold down long-term interest rates.
One of these bonds issued by the UK Treasury, known as gilts, matured this month and the BOE will maintain the size of its asset purchases by reinvesting the proceeds in other bonds, a move that was flagged by the BOE as part its forward guidance to financial markets about its future policy stance.
In August the BOE said it would not raise interest rates until the unemployment rate fell to 7.0 percent but strong growth and a swift decline in the unemployment rate to 7.2 percent in the three months to December forced the U.K. central bank to revise its guidance in February.
Instead of linking any changes in its monetary policy stance to a single economic indicator, the BOE said it would only raise rates when there was less economic slack in the economy.
Policymakers have repeatedly stressed that there are in no rush to raise rates and the first rate increase is first likely in the spring of 2015.
The U.K.’s Gross Domestic Product expanded by 0.7 percent in the fourth quarter of 2013 for annual growth of 2.7 percent, up from 1.9 percent in third quarter.
A further easing in inflation to 1.9 percent in January, the first time since November 2009 that inflation was below the BOE’s 2.0 percent target, has helped ease some of the pressure on the BOE to use higher interest rates to push down inflation.
