(Kitco News) - The British pound strengthened against gold after the Bank of England (BoE) held interest rates unchanged at its September meeting.
On Thursday, the BoE announced that they decided to maintain its Bank Rate at 5%, after delivering a 25 basis point cut at the August meeting.
The U.S. Federal Reserve kicked off its easing cycle on Wednesday with a 50 basis point reduction. The Bank of England was the third major central bank to cut interest rates before the Federal Reserve, joining the Swiss National Bank, the Bank of Canada, and the European Central Bank.
Spot gold sold off somewhat against the GBP in the wake of the rate announcement. Spot gold last traded at £1,942.95, up 0.31% on the day.
Thursday’s rate cut was much more of a consensus move than the BoE’s August decision. The rate hold passed 8-1, with the lone dissenting vote favoring a cut, while the August cut passed with a narrow 5 to 4 vote.
“Monetary policy decisions have been guided by the need to squeeze persistent inflationary pressures out of the system so as to return CPI inflation to the 2% target both in a timely manner and on a lasting basis,” the BoE's monetary policy statement said. “Policy has been acting to ensure that inflation expectations remain well anchored.”
“In the absence of material developments, a gradual approach to removing policy restraint remains appropriate,” the statement added. “Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.”
