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Bank of England keep rates and QE unchanged

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(Kitco News) - 

The Bank of England (BoE) stood pat on rates on Thursday, rates were expected to remain on hold and since there has been some softness in the data the vote count was unanimous. Elsewhere, the BoE voted 7-2 to maintain gilt purchase at £875 bln. 8-1 was expected and Ramsden and Saunders dissented as they wanted a cut QE to £840 bln. Interestingly the market's reaction to the news was positive for the Pound. GBP/USD moved above 1.37 to trade at daily highs following the announcements from the BoE.
 
Key comments:
The BoE also said any initial tightening should be via the bank rate.
Inflation is set to rise slightly above 4% this year according to projections.
The bank held the Gilt purchase target at £875 bln and the corporate bond target At £20 bln.
After the August report, the bank employees have reduced their projections for the amount of U.K. GDP in 2021 Q3 by roughly 1%.
Markets have brought forward rate hike expectations to March 2022. Elsewhere across the curve expectations have risen too. GBP rose to sessions highs following the news.
Traders now see a BoE rate at 0.50% in September 2022.
 
Analysts had expected the bank to stand pat on rates today but some had suggested that Saunders would probably vote for a cut in the gilt purchase target by £45 bln and there was a minor chance that Pill will agree too. There is also a strong case that MPC members would want to wait and see how the labor market would react to the end of the furlough scheme too. 
 
Prior to the meeting Nomura had said “We expect a unanimous vote for no change in rates, one member to continue voting to end the QE programme early, and at least five members saying that they think guidance (with respect to tightening policy) conditions have been met (up from four at the August meeting) even if we’re some way off the Bank pulling the trigger on rates.”
 
 
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