Webinar: Live Event Coverage: Bank of England Rate Decision

One member of the nine strong policymaking committee at the Bank of England voted for an interest rate rise this month in the first split on the committee in nearly a year.

The bank voted also to leave the level of its cash stimulus programme pumping around the United Kingdom economy at 435 billion ($537 billion, 501 billion euros).

The BoE announces its policy decision at noon in London, and economists predict the benchmark rate will stay at a record-low 0.25 per cent.

Jeremy Duncombe, Director, Legal & General Mortgage Club, commented: “The Bank of England has chosen not to follow the Fed by voting for a rate rise – no surprise there”.

Forbes is one of the most hawkish members on the MPC and she is due to leave the committee in June when her term expires which will lessen the impact of her dissent to some extent. “Attempting to offset fully the effect of weaker sterling on inflation would be achievable only at the cost of higher unemployment and, in all likelihood, even weaker income growth”.

The US central bank lifted the funds rate to between 0.75% and 1.00%, as expected.

Sterling jumped 0.9 cents against the dollar to $1.2353 after the vote was published as traders… The Bank reiterated it might have to act should inflation overshoot its margins of tolerance. Forbes supported a rate increase to 0.5 percent, and some of those in the majority said it wouldn’t take much more strength in inflation or growth for them to also shift their view. But real average earnings growth – pay adjusted for CPI inflation, excluding bonuses – was flat on a year ago (the weakest outturn since mid-2014) as nominal wage growth continued to edge lower against a backdrop of higher inflation.

JAPAN STANDS PAT: Japan’s central bank held monetary policy steady as the Fed and Europe’s central bank move toward tightening.

The Bank of England is expected to keep rates low as Article 50 is triggered and negotiations for leaving the European Union (EU) begin.

Apart from measures taken in interest rate actions, the bank also introduced on January 19 a foreign exchange swap mechanism in which the banks lend liras to the Central Bank while borrowing dollars to pay at a due date with a predetermined interest rate.