Bank of England points to new oil price fall, slower wage growth

For the majority of officials at the BOE, the outlook for growth and inflation in the United Kingdom doesn’t yet justify an increase in the central bank’s benchmark rate.

The Bank of Korea’s monetary policy committee held its base rate steady at 1.50 per cent, a media official said without elaborating.

In contrast to the Bank of England, investors are expecting the U.S. Federal Reserve to raise interest rates next week for the first time in nearly a decade.

A Bank of England meeting this week offers some hope of a boost for sterling, if the bank’s minutes again signal a rate increase next year or one or more of the bank’s inflation hawks vote at the meeting to raise rates.

Chris Williamson, chief economist at Markit, said a move by the Fed to hike rates next week would put pressure on United Kingdom policymakers to follow suit.

Regarding the latest decision on interest rates, senior economist at Julius Baer David Meier said: “At yesterday’s December meeting the BoE’s Monetary Policy Committee (MPC) was not in the mood to rattle markets out of their comfort zone before the holiday season”.

Consumer price inflation rose from 0.9% the month before to 1.0% in November, due mainly to a narrowing of the scale of decline in petroleum product prices and to expansions in the extents of increase in service fees. Since falling below 1.06 at the start of the month, the euro has rallied by almost 5% against the dollar.

Expectations for when the first United Kingdom rate rise will eventually come vary significantly, although most believe a hike will be made before 2017 – at odds with forecasts in the Bank’s own November inflation report.

“With the inflation outlook remaining benign for the foreseeable future and coupled with weaker worldwide growth, the Bank of England is right to keep interest rates on hold”.

Carney alluded to a few of these – lower global growth, low inflation, strong pound – but on top of that, the U.K.is expected to vote on European Union membership in the middle of next year and more government spending cuts are planned.

The National Bank of Serbia kept its one-week repurchase rate at 4.5 percent on Thursday, according to a statement on its website, after it reduced it by a combined 1.5 percentage points from August to October. We further suspect that the fact that the stocks of mining companies are overrepresented in FTSE relative to other major stock indices should continue to weigh on GBP against the background of persistent downside risks for global commodity prices.

The Bank of Korea has predicted GDP growth of 2.7 per cent for the whole of 2015.