- Howard Archer, an economist at IHS Global Insight
As widely expected, the Old Lady on Threadneedle Street left the monetary policy intact in November, keeping interest rates at ultra-low of 0.5% and the volume of asset purchases at 375 billion pounds. Next week's Inflation Report should provide more details on the Bank of England's thinking, and the new streak of estimates on growth, labour market, and inflation should offer more insight into the future path of interest rate movements. Some economists have forecasted a first hike in the first quarter of 2015, while bets in financial markets point to the middle of the year or later. The MPC has been split on rate hike since August this year through October, with two members, namely: Martin Weale and Ian McCafferty, voting for an immediate 25 basis point rate hike. Both policymakers are viewed as more hawkish in terms of their view of inflationary threats. Nevertheless, so far strong dovish signals from the nine-member Monetary Policy Committee have indicated recently that the BoE's monetary policy is set to remain highly accommodative until at least spring of 2015.
The U.K. recovery remains robust enough that some forecasters have revised their expectations for growth upwards. The European Commission said this week Britain will expand 3.1% this year and 2.7% in 2015, faster than it saw in May and a contrast to its downgrade to Euro zones forecasts.
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