- Steven Bell, an economist at F&C Management
The Bank of England offered no surprises to markets and lefts its monetary policy unchanged during June's meeting, given its vocal commitment to keep the base rate unchanged for as long as possible. The benchmark interest rate stood at a record-low of 0.5%, while the volume of central bank's quantitative easing remained unchanged at 375 billion pounds, staying there since July 2012. A more detailed report on the meeting will be available to public on June 18. While the central bank has been sticking to its forward guidance since it has been announced, some members are starting to have a different view on the economy. Analysts now expect Martin Weale will be the first member to vote for a rate hike. It is believed the central bank will start tightening its monetary policy early in 2015, making only gradual changes to the policy.
On the back of the central bank comments, the cable climbed 0.22% to 1.6770. While MPC nine members can divide in their assessments, the Governor has find a new ally in his battle to keep the policy loose. This person is Mario Draghi, as due to the decision to push the trigger and cut all three interest rates will provoke an appreciation of the Sterling versus the single currency, hence, curbing Britain's inflation. While Carney expects the CPI to hover slightly below the official target, rapid growth can push the indicator significantly above 2%, hence, any help from outside will be welcomed.
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