"Carney presumably feels that his speech in Nottingham last week set the BOE's stall out clearly enough. Markets, ourselves included, suspect that the first rate hike is more likely to come in early to mid-2015 than the third quarter 2016 date suggested by the BOE."
- James Knightley, an economist at ING Bank NV in London
Britain's central bank kept its flagship policies unchanged on Thursday, as the policymakers need more time to gauge the impact of forward guidance, introduced by Mark Carney in August. As it was widely anticipated the BoE left the volume of bond-buying programme at 375 billion pounds, while the benchmark interest rate remained at a record low of 0.5%. The more detailed information, including the composition of votes within the nine-member Monetary Policy Committee will be available on September 18. This decision means the nation's authorities will remain in wait-and-see mode for some time, until they will be able to assess the potential impact of the forward guidance. This analysis will allow the BoE to offer the market participants and simply customers a more or less clearer picture on the future path of its monetary policy.
Earlier this month the BoE Governor pledged not to consider rising its key interest rate before the overall unemployment rate hits 7%, which is not expected to happen until the fourth quarter of 2016. Even despite this pledge Carney reassured market unemployment rate will not be a trigger for the policymakers to raise the borrowing costs. Amid all efforts from Carney investors are adding to bets interest rate will rise sooner than it is suggested. Soon after the BoE's conference, yields on 5 and 10-year government bonds soared to a two-year high.
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