The Bank of England’s Monetary Policy Committee (MPC) has decided against adding further stimulus to the UK economy, keeping rates and bond purchases on hold at its September meeting.
The MPC voted unanimously to keep base rates at 0.25 per cent, government bond purchases at £435bn and corporate bond purchases at £10bn.
This was the first MPC meeting after last month’s decision to cut rates, increase gilt purchases and add corporate bonds to its scheduled buying spree. The central bank also released its inflation report in August which dramatically cut growth forecasts for 2016 in the aftermath of the UK’s decision to leave the EU.
In minutes also released today (September 15), the MPC said: “The package of measures announced by the MPC at its August meeting led to a greater than anticipated boost to UK asset prices.”
It added: “Since the August inflation report, a number of indicators of near-term economic activity have been somewhat stronger than expected. The Committee now expect less of a slowing in UK GDP growth in the second half of 2016.
“It was more difficult to draw a strong inference from these data about the Committee’s projections for 2017 and beyond.”
BoE governor Mark Carney has previously hinted that base rates could be cut close to 0 per cent at some point this year. Eyes will now turn to October’s meeting.
Alternatively, the MPC may decide to coincide any additional action with its next inflation report in November, which will provide more concrete guidance on the UK’s economic outlook after the June 23 referendum decision.
