The Bank of England keeps rates and QE unchanged
(Kitco News) - The Bank of England left interest rates unchanged at 0.10%.
The vote split for rates was 8-0
QE has been kept unchanged
The vote split (6-2 expected) for QE to stay the same was 7-1. Michael Saunders was the sole dissenter.
The Bank of England says it is ready to use negative rates if needed. BoE also said inflation has risen above our 2% target. Prices rose by 2.5% between June last year, when prices were low because of Covid, and June this year. The BoE intends to begin QE unwind when the benchmark rate is at 0.5% and will actively consider selling bonds once the rate is at least 1%.
Ahead of the meeting a few of the MPC members expressed a desire to scale back the bank's level of accommodation. The dissenters were touted to be Michael Saunders and Dave Ramsden as in previous meetings and interviews they were seen to be the more hawkish members of the policy committee. The Hawkish Haldane is also set to be replaced so the market could receive information about who could be the new chief economist.
(Forecast and projections)
The Bank still sees U.K. GDP forecast at 7.25% for 2021 but raises 2022 GDP forecast to 6% from 5.75%, raises 2023 view to 1.5% from 1.25%.
The BoE raises the U.K. CPI forecast to 2.5% in 2022 from 2% and sees 2023 CPI at 2% (unchanged) but raises U.K. CPI forecast to 4% in 2021 from 2.5%.