‘The BoE sounds ‘less dovish’ rather than the expected ‘less hawkish’. Interesting’. – Mike van Dulken, Accendo Markets
The Bank of England left its monetary policy unchanged at its March meeting on Thursday. Eight of nine policymakers voted to keep the key interest rate at the record low level of 0.25%. Kristin Forbes, who is due to leave the BoE in June, cast the sole vote in favour of raising interest rates to 0.50%, adding that she was feeling uncomfortable keeping interest rates on hold. According to her, the post-Brexit economic slowdown has not materialised yet. Analysts suggest that the key policy rate will remain unchanged until the Brexit situation becomes clearer. All of the BoE’s officials voted anonymously to maintain the asset-buying plan at 435 billion pounds, as markets expected. At the meeting, policymakers stated that slow wage growth and rising inflation, driven by the sharp fall in the value of the Pound, started to put downward pressure on British consumers. Earlier this week, the ONS reported that wage growth fell to 2.2% during the three-month period to January. This drop called into question the BoE’s 2017 wage growth forecast of 3%. The BoE also said that it could tolerate a quicker pace of price rises, following a decade of below-target inflation. After the release, the Pound rose to 1.1518 against the Euro and 1.2363 against the US Dollar.
