-Vicky Redwood, economist at Capital Economics Ltd.
The Bank of England's Governor Mervyn King was defeated in his final vote as a member of Britain's Monetary Policy Committee on Thursday, as the central bank refrained from more stimulus measures, amid signs the economy is picking up steam. The BoE decided to leave the main refinancing rate at 0.5% and kept the size of its bond-buying stimulus programme at £375 billion, meeting analysts' expectations. It was the last King's policy meeting before the arrival next month of his successor- former chief of the Bank of Canada Mark Carney.
Mr King was pushing for more stimulus measures since February, and as the nine-person panel voted not to introduce any shift into its monetary policy, King is expected to stick with his call for another £25 billion of bond-buying. The U.K. economy avoided falling into a triple-dip recession and the recent data showed that manufacturing and services sectors strengthened in May, suggesting the economy will continue gathering strength. However, growth isn't as fast as it was expected and Carney, who is known for his forward guidance and risks may persuade other members to inject more money into the economy. Anyway Carney will face significant challenges such as a continuing recession in the neighbouring Eurozone, Britain's biggest trading partner.
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