Bank of England votes unanimously to keep interest rate and QE unchanged By Investing.com

By Samuel Indyk

Investing.com – The Bank of England has today decided to keep its interest rate and asset purchase programme unchanged in a unanimous decision. The Monetary Policy Committee (MPC) also stated that they judged that the existing stance of monetary policy remains appropriate.

“The Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably,” the Bank of England’s MPC said in a statement.

Economic Recovery

“The outlook for the economy, and particularly the relative movement in demand and supply during the recovery from the pandemic, remains unusually uncertain,” the Bank said. “It continues to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments.”

On the recent rise in global yields, the Bank of England noted that the upward movement appears to have been driven by positive news on global economic growth, including on some vaccination programmes and vaccine effectiveness, as well as the size of the US fiscal support package.

Market Reaction

The initial reaction in UK asset classes has been relatively muted as the Bank of England provided no real surprises in their statement.

GBP/USD trades with slight losses on the day while the FTSE 100 is also marginally lower. United Kingdom 10-Year gilt yields fell marginally after the statement and minutes but still remain higher by 6 basis points on the day, just below 0.9%.