The Old Lady of Threadneedle Street, also known as the Bank of England, left its monetary policy unchanged at the April meeting to see whether a decline in inflation is temporary or exacerbates and turns into a threat for the UK economy. In the last interest rate decision before the general election on May 7, the central bank maintained its benchmark borrowing rate at 0.5%. More details on vote composition among the nine-member Monetary Policy Committee will be revealed in the meeting minutes due out on April 22. The BoE remains in wait-and-see mode as new outlook looms. Officials will report on their forecasts for inflation, economic growth, and the labour market on May 13 as part of the quarterly Inflation Report.
Australia
The Reserve Bank of Australia held interest rates at 2.25% for the second consecutive month, referring to a slight improvement in activity and Sydney house price inflation in its decision. The move came as a surprise to financial markets, which had priced in a 70% possibility of an interest rate cut. However, the RBA said further interest rate cuts are still on the cards over the period ahead in order to ensure sustainable growth in demand and inflation consistent with the official goal. The central bank's last reduction, in February, was the first in 18 months. It was designed to foster non-mining growth in the face of tepid consumer spending and business investment.
Japan
The Bank of Japan kept its monetary policy settings and its sanguine view on economic prospects unchanged , reiterating that the world's third largest economy is recovering steadily. In line with expectations, by an 8-1 vote the central bank decided to maintain a pledge to expand the monetary base at an annual pace of 80 trillion yen. The BoJ board member Takahide Kiuchi proposed the central bank to reduce its asset purchases to 45 trillion yen a year. In an accompanying statement, the BOJ said consumer inflation, excluding the sales tax increase that came into effect in April last year, currently hovering at 0%, will remain around that level for a while on the back of a plunge in oil prices. Given the excessively low inflation, there is mounting speculation that the BoJ will soon expand its qualitative and quantitative easing programme from the current 80 trillion yen per year, possibly as soon as the end of April when the BoJ board next meets. The BOJ has stood pat on policy since expanding stimulus in October last year to prevent plunging oil prices, and a subsequent decline in inflation, from delaying a sustained end to deflation.
US
Fed officials remained divided on the timing of the first interest rate lift-off in almost a decade, the official account of the FOMC's March meeting showed. Policy makers were considering a wide range of possible rate hike dates with some of them still believing the meeting in June as an appropriate time to begin normalizing monetary policy. Others, however, favoured the first increase in the federal funds rate since the financial crisis to come later in the year as they remained unsure about how long energy-price declines and a stronger Greenback would distort inflation data. There were also a number of policy makers, who argued that the world's biggest economy would not be ready for tighter policy until 2016. The disagreement could present a challenge for Fed Chairwoman Janet Yellen in the months ahead. Yellen led officials to a unanimous decision in March to drop a pledge to be "patient", the change which effectively opened the door to rate increases by midyear. Yet tough decisions now loom about whether to move then.