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.