- Previous vote 1/9/2014
Held at 0.50%
(BoE Minutes PDF)
- Latest vote 2/6/2014
Held at 0.50% (statement)
Asset Purchases remain the same
- Next meeting:
- April UK Markit/CIPS services PMI 58.7 vs 57.6 exp
- GBP/USD Technical Levels and Outlook 5/6
- UK mortgage approvals March 67.14k vs 71k exp
- UK Markit/CIPS mftg PMI April 57.3 vs 55.4 exp
- UK Q1 GDP prelim q/q + 0.8% vs +0.9% exp
- Positive UK Retail Sales and a Bullish GBP/USD
- UK BBA mortgage approvals March 45,933 vs 47,196 prev
- UK retail sales March m/m +0.1% vs -0.4% exp
- UK Unemployment Falls Below BoE Threshold
- GBP/USD and GBP/JPY Soars after UK Unemployment Rate Drops to 6.9%
- GBPCAD Reversal Candlesticks at Resistance, Fib Line, and 50 SMA
- Going Long GBPAUD As Doji Forms Off Support
- Another Hammer Off Support on GBPUSD
- Taking Another Shot on Going Long GBPJPY
- Doji Forms on GBPUSD As Pair Pulls Back to Trendline
- Accumulation Occurring on GBPJPY?
- Beautiful Bearish Checkmate on GBPAUD
- GBP/USD Technical Levels and Outlook 5/6
- GBP/USD Tags 1.69, Making New Highs on the Year; 1.70-1.7040 Will be Key Resistance
- EUR/GBP – Consolidating at a Falling Wedge Resistance
Feb. 12 - Bank of England Inflation Report
BoE Governor, Mark Carney struck a positive tone when speaking of the UK economy. Economic recovery is expected to be faster this year than previously thought, and inflation has come back to 2.0%.
Carney also noted a key change in forward guidance: The bank has been keeping away from considering a change in interest rate as long as the jobless rate is above 7.0%. Carney announced that the bank is moving away from this criteria.
Carney mentioned “spare capacity” quite a bit. When current spare capacity is absorbed, the bank will consider raising rates, but must do it slowly because of much headwind to the economic recovery.
As far as the asset purchase program. The 375 billion pound level will remain until the first rise in bank rate, which requires spare capacity to be absorbed further.
Watch the 2/12 BoE Inflation Report (flash required)
Feb. 6 - In a familiar tone, the bank voted to keep the Bank Rate at 0.5% and the asset purchase program at £375b. Nothing new here.
Jan. 9 - Inflation decelerated to 2.1%, and jobless rate is at 7.4%. However, the BoE will keep the interest rate at 0.5% at least until the jobless rate falls to 7.0%. The Bank also decided to maintain the pace of asset purchase program at 375 billion pounds. Nothing new here. Though, as jobless claims fall, we should start to expect some change in tone regarding Asset purchases and/or interest rates. Here’s the bank on its immediate policy decision:
The Committee set monetary policy to meet the 2% inflation target in the medium term, but in a way that helped to sustain the recovery. In pursuit of that objective, the Committee had, at the time of its August Inflation Report, provided guidance regarding the path of monetary policy. That guidance stated that the Committee did not intend to raise Bank Rate from its current level of 0.5% or to reduce its stock of asset purchases, at least until the LFS headline unemployment rate had fallen to a threshold of 7%, subject to three ‘knockout’ conditions, relating to: the judged likelihood that inflation would not exceed 2.5% 18 to 24 months ahead; whether measures of medium-term inflation expectations remained sufficiently well anchored; and the impact of the stance of monetary policy on financial stability, as judged by the Bank’s Financial Policy Committee (FPC). – Excerpt from the BoE Meeting Minutes (pdf).
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: