Bank of England holds fire ahead of guidance revamp

Thu Feb 6, 2014 7:28am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Andy Bruce and William Schomberg

LONDON (Reuters) - The Bank of England kept its monetary policy unchanged on Thursday as it worked on a new plan to steer interest rate expectations after its previous one was overtaken by Britain's strong economic recovery.

The BoE left its Bank rate at 0.5 percent, where it has stood since the depths of the financial crisis in early 2009.

Britain's economy last year staged a surprise turnaround and markets are pricing in at least some chance of a rate hike late this year. BoE Governor Mark Carney and other policymakers have had to stress that they are in no rush to raise rates.

There was little reaction in financial markets to the expected decision. The pound, which hit a seven-week low against the dollar on Wednesday, was flat on the day at 1214 GMT (7:14 AM EST).

A plan announced by the BoE last August - not even to think about higher interest rates until unemployment fell to 7 percent - has been rendered almost obsolete by a plunge in the jobless rate to just above that level.

The BoE is expected to give at least some clues as to its new guidance plan next Wednesday when the central bank publishes its quarterly economic forecasts and holds a news conference.

"There was an outside chance of the BoE delivering a post-meeting update in response to speculation about changes to their forward guidance," said James Knightley, economist at ING.

"But it now looks as though an update on the situation will come with next week's inflation report."   Continued...

A woman exercises on the steps of the Bank of England in the City of London January 16, 2014. REUTERS/Luke MacGregor