- Bank of England
Minutes of the BoE Monetary Policy Committee's May policy meeting showed nine members voted unanimously to maintain the benchmark interest rate at all-time low of 0.5% this month and to keep the size of the central bank's bond portfolio at 375 billion pounds. Central bankers predicted the UK economic growth to accelerate in the second quarter after a weak start to the year. The BoE estimated a quarterly growth in the three months through June to increase to 0.7%. Policy makers also expected slack in the economy is likely to fully eroded within a year, pointing to potential future price pressures that will spur policy tightening.
The comments echo the MPC's view in the Inflation Report released last week that the next likely policy decision would be a hike of the benchmark interest rate, which has been at a record-low 0.5% for more than six years. However, with the inflation rate in negative territory, there is no immediate pressure on the central bank to begin policy tightening now, and markets expect a rate hike to come not earlier than mid-2016. BoE officials led by Governor Mark Carney said they see price-growth to resume towards the end of the year, fuelled by faster wage growth and a recovery in oil prices. Minutes of May's policy meeting showed the MPC expected annual inflation to accelerate "notably" towards the end of 2015 and return to its 2% goal by early 2017.
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