BoE set to keep monetary policy unchanged amid low inflation

Source: Dukascopy Bank SA
"The bottom line is that there is a risk that the combination of persistently low global inflation and the strength of sterling could weigh on prices here for some time"
-Mark Carney, BoE Governor


The BoE's decision in March to keep the benchmark interest rate intact marked six years of record low interest rate environment in Britain. Back in March 2009, the central bank decided to slash the rate to 0.5% to cushion the adverse consequences of the 2008 credit crunch. Since then, the UK economic growth has recovered to above the pre-crisis levels and the jobless rate declined sharply to the lowest level in six years at 5.7% in December last year. Moreover, unemployment is predicted to drop further by the end of this year. Yet, the BoE plans to keep the rate at ultra low level for some time to come as intensifying global deflationary forces are likely to keep UK consumer inflation at the record low at least until the end of year. Therefore, minutes from the March meeting of the Monetary Policy Committee are likely to show all the policy makers voted to maintain the policy. 

On top of that, Pound's appreciation could postpone the normalization of monetary policy in Britain as its downward impact on domestic consumer price inflation could become more persistent than previously thought. The Sterling rose versus the Euro after the European Central Bank announced its full-blown quantitative easing programme. BoE policy maker Kristin Forbes admitted recently that the Pound's appreciation from early 2014 appeared stronger and faster than previously estimated. 


© Dukascopy Bank SA

Actual Topics

Subscribe to "Fundamental Analysis" feed

Subscribe
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.
To learn more about Dukascopy Bank Binary Options / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Crypto Trading / CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Business Introducer and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.