- Previous vote 10/10/2013
Held at 0.50%
Meeting minutes (pdf) released 10/23
- Latest vote 11/7/2013
Held at 0.50% (statement)
Asset Purchases remain the same
- Next meeting:
- November UK Markit/CIPS services PMI 60.0 vs 62.0 exp
- UK data – BRC shop price index for November: -0.3% y/y (prior was -0.5%)
- BOE’s Broadbent says overall effect of loose monetary policy is “undoubtedly positive”
- Carney: Not fully true that SME’s can access credit on competitive terms
- BOE MPC Minutes: see sustained recovery in UK
- GBP/USD – Steady As Markets Await Fed Minutes
- UK retail sales add balance to the optimism.
- UK retail sales oct ex fuel m/m -0.6% vs -0.2% exp
- Despite a bounce, EURUSD top intact for bearish bias
- We’ve had good news for the pound; we’ve had bad news for the pound
- Daily Forex Update: EUR/GBP
- GBPUSD eyes 1.6500 on the way to target 1.6617 and 1.6745 into year-end
- GBP/USD – Resistance Level at 1.6250 Fends Off Again
- Daily Forex Update: GBP/JPY
- GBP/USD – Steady As Markets Await Fed Minutes
- GBPUSD rejecting a top, risk back up to the 1.6255/60 peaks
- Technical Outlook – GBPUSD, EURUSD, AUDUSD
- GBP/USD Completes Double Top after Inflation Data – Now What?
- Technical Outlook – EURUSD, AUDUSD, GBPUSD
- Daily Forex Update: GBP/NZD
November 7 – The Bank of England held its benchmark rate at 0.50% and its asset purchase program the same, at 375bn pound. Nothing new on forward guidance. The bank is basically on a sit and wait approach, which means the market will be looking for good economic data, which should raise the prospect of the MPC reducing the asset purchase program. This would be positive for the GBP. It has already shelved a rate cut or increase in QE, it might be a matter of time the market makes that turn towards expecting a more hawkish BoE.
October 23 – The MPC meeting minutes for the 10/9 meeting showed a unanimous vote to hold interest rates and the pace of asset purchase program as is. It showed a slightly more hawkish outlook on the economic recovery citing that unemployment has been dropping faster than anticipated. Remember it is looking for the jobless rate to fall below 7% to reduce the asset purchase program. Here’s an excerpt from the minutes regarding unemployment:
The headline LFS unemployment rate had fallen but, at 7.7% in the three months to July, remained well above the Committee’s 7% forward guidance threshold. The recent reduction in the unemployment rate indicated that slack in the economy was, as anticipated, being eroded as activity picked up. If anything, that was occurring a little faster than envisaged at the time of the August Inflation Report, although it remained unusually difficult to gauge the effective degree of slack in the economy. It was encouraging that private sector hourly productivity had grown at close to its trend rate in the second quarter following two years of falling productivity. But it was too early to draw a strong inference about future prospects from the latest data.
Within the framework provided by forward guidance, the Committee would continue to monitor closely the evolution of the labour market, productivity, and a range of indicators of economic capacity pressures and the domestic inflationary pressures resulting from them.
October 10 - The decision from the latest BoE meeting was relatively uninteresting. The bank held the benchmark interest rate at 0.50% and the asset purchase program at 375bn pound. We shouldn’t expect interest rate to change anytime soon. More signs of economic recovery will also be needed for the bank to consider scaling down the asset purchase program.
The minutes to this meeting will be released Oct. 23.
Sept 18 – The minutes showed that the 9/4 meeting had a unanimous (9-0) vote to maintain rates and the pace of asset purchase program. The bank appears to be cautiously upbeat on the economy, giving a 0.7% forecast for Q3 GDP, up from 0.5% in the previous assessment.
September 4 -Carney has already linked tightening of policy if unemployment falls to 7%, which the bank had forecast to be in 3 years. Recent UK data has been positive and provides prospect of an earlier tightening if they are indicative of a faster economic recovery than the BoE had forecast in the previous meeting.
Full Text from the release:
The Bank of England’s Monetary Policy Committee at its meeting on 4 September voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion.
The minutes of the meeting will be published at 9.30am on Wednesday 18 September.
August 13 – From the minutes regarding BoE forward guidance:
August 7 -The Bank of England provided its Quarterly Inflation Report and Mark Carney held a press conference.
Mark Carney provided forward guidance, linking any tapering consideration to ability of the unemployment rate to drop below 7.0%. Based on the bank’s economic forecast, this won’t be until Q3 2016 (3 years from now).
The other take away was that GDP forecast improved
2013: 1.5% (up from 1.2% previously)
2014: 2.4% (up from 1.9% previously)
Learn about the Bank of England
1) Monetary Stability
- Keep inflation on track to meet the 2% target
If inflation is more than 1 percentage point off on either side, the Governor of the Bank must write an open letter to the Chancellor of the Exchequer explaining why it is so and proposing what the BoE will do to bring inflation back to the target rate.
- Maintain policies, tools and infrastructure to implement policy and issue banknotes
2) Financial Stability
All other strategies are under these two core mandates.
The Monetary Policy Committee (MPC) is the group responsible for setting interest rates and is made of nine members. The MPC meets throughout the month to go over reports and stats and assess the latest economic and financial conditions and developments.
In working towards its core purposes, the Bank is organized into four main divisions. The current structure was introduced in June 1998 to reflect responsibilities set forth in the 1998 Bank of England Act.
- Monetary Analysis and Statistics: Provides the MPC with data to make monetary policy decisions.
- Markets: Implements and supports the MPC’s decisions in the sterling money markets.
- Financial Stability: Works with the HMTreasury and the FSA to sustain stability of UK’s financial system.
- Banking Services: Provides banking services to the government and other financial institutions and central banks.
These 4 operational areas are supported by a Central Services division.
The nine MPC members are currently:
Mark Carney, Governor
Charles Bean, Deputy Governor
Paul Tucker, Deputy Governor
Here is a look at the latest BoE’s management structure: