The Bank of England voted unanimously at its meeting ending Thursday, August 5th, to maintain the current interest rate at 0.10% levels, unchanged as expected, and the committee voted by 7 members to 1 to continue the Bank’s bond purchase program at 895 billion pounds.
In the monetary policy report issued by the Bank, the Bank changed its expectations for the growth of the British economy and inflation, as the Bank raised its forecast for GDP growth to 5% in the second quarter of next year 2021, slightly stronger compared to the May report, while the Bank lowered its expectations for economic growth in the third quarter to 3% with the impact of the recent epidemic developments, but the Bank expects the British economy to reach pre-pandemic levels in the fourth quarter of next year 2021.
Unemployment rates reached 4.8% in the three months ending in May and temporary jobs continued to decline as demand recovered and wage rates were on a regular basis in the private sector.
Consumer price index inflation over the 12-month period rose to 2.5% in June, above the bank’s target of 2%, while the core index rose to 2.3%.
The bank expects inflation to rise temporarily to 4% in the fourth quarter of next year with developments in energy and commodity prices before it stabilizes At the bank’s target in a sustainable manner.
The Bank of England, as expected, did not give the markets a clear indication about the future of the bank’s asset purchases and raise interest rates, and kept all possibilities open, but it indicated that interest rates may rise before starting the process of easing the quantitative easing process and that it is based on the upcoming economic numbers.
The British pound reacted positively to the statement and rose against the US dollar to test 1.3944 levels, and is now trading at 1.3925 levels.
06/11/2024
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