💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Bank of England holds, expects slightly lower inflation path

Published 12/15/2016, 07:06 AM
© Reuters.  Bank of England holds, expects slightly lower inflation path

Investing.com - The Bank of England said on Thursday it was leaving interest rates on hold at record lows at the conclusion of its final monetary policy meeting of 2016.

The BoE said its nine member monetary policy committee was unanimous in the decision to keep interest rates at a record low of 0.25%.

Policymakers also voted 9-0 to keep the bank's bond-buying program target at £435 billion and to continue with its new plan to buy up to £10 billion of corporate bonds.

The bank expects inflation to rise to its 2% target within six months.

The appreciation in sterling and the increase in oil prices since the banks last meeting are expected to result a slightly lower path for inflation than envisaged in the November inflation report, the meeting minutes said.

The bank still feels inflation is likely to overshoot the target later in 2017 and through 2018.

The bank noted that there are limits to the extent to which above-target inflation can be tolerated.

Those limits depend on the cause of the inflation overshoot, the extent of second-round effects on domestic costs, the evolution of inflation expectations, and the scale of the shortfall in economic activity below potential the bank said.

Data on Tuesday showed that the rate of inflation in the UK jumped to a two-year high of 1.2% in November from a year earlier as the sharp fall in the pound since the vote to leave the European Union fed through into prices.

Another report on Wednesday showed that employment in the UK fell for the first time since the EU referendum.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.