The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.

The Committee's latest inflation and output projections will appear in the Inflation Report to be published at !0:30 am on Wednesday 15th May.

The minutes of the meeting will be published at 09:30 am Wednesday 22nd May.

Richard Driver, FX Analyst with CaxtonFX,com, responded saying:

"This ‘no change’ decision is entirely in line with expectation.

"The majority within the MPC were reluctant to add more QE at the height of triple-dip concerns, so in light of the firmer UK growth figures which have surfaced in the past few weeks, I’d have been shocked to see more easing announced today.

"The MPC doves will have to be satisfied with the recent extension to the Funding for Lending Scheme because as it stands, more QE from the BoE is looking increasingly unlikely. 

"Focus now turns to next Wednesday’s May Inflation Report, which will undoubtedly highlight the uncertain outlook for UK growth this year, though it will be underpinned by some justified cautious optimism."

KPMG's Chief Economist, Andrew Smith, said:

It comes as no surprise that the Monetary Policy Committee has decided to sit on its hands again. After all, since the last meeting the growth outlook has improved and inflation – which is running well above target – remains stubbornly high.
Bank of England - FreeFoto.com

Bank of England – FreeFoto.com

So for now QE has been kept on hold, but this is unlikely to be the end of the story. The economy retains a large amount of spare capacity – which should restrict further price increases – and the recovery is likely to remain weak as households struggle against a backdrop of high debt and falling real wages, austerity measures continue to bite and our main export market – Europe- stagnates.

Recently the MPC has been split over providing further stimulus and it’s unlikely the impasse will be resolved before the replacement of the current Governor in July – indeed we are now in a lame duck period. But as fiscal policy remains conservative, the Chancellor is putting a lot of weight on monetary activism. Over to you, Mr Carney.”
 

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