Bank of England Keeps Banks Rate Unchanged — Will Only Tighten if Inflation Target is Met

Source: Bank of England

The Bank of England’s Monetary Policy Committee on Thursday decided to keep the bank rate and bond-buying program unchanged, even as inflation is poised to temporarily breach the 2% target.

• The MPC unanimously voted to maintain the Bank Rate at 0.1%.
• The committee also decided to keep the bond-buying program at £890 billion — £875 billion for government bond purchases and £20 billion for corporate bonds.
• Inflation is expected to temporarily accelerate to as high as 4% in the near time due to movements in energy and other goods prices.
• Inflation will then decelerate and move closer to the 2% target as pressures are only transitory.
• The MPC maintained it will not tighten policy until it sees “clear evidence” that progress is being made in achieving the inflation target.
• Several committee members said there has already been “considerable progress” but still do not warrant a tightening.
• The committee reiterated that it will focus on medium-term inflation prospects rather than transient factors.