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BOE maintains rates at 0.75%, drops limited and gradual tightening

BOE maintains rates at 0.75%, drops limited and gradual tightening

By: Abdulrahman Mamdouh

Mubasher: Bank of England (BOE) has kept its interest rates at 0.75% on Thursday, saying that the policy stance is “appropriate”, in what is considered Mark Carney’s, the bank’s governor, last hurrah.

The Monetary Policy Committee (MPC) of BOE voted by a majority of 7-2 for maintaining the rates, yet voted unanimously to keep the stock of sterling non-financial investment-grade corporate bond purchases at GBP10 billion. In addition, the committee voted unanimously to keep the stock of UK government bond purchases at GBP 435 billion.

However, BOE dropped its guidance for limited and gradual policy tightening, leaving the door open. BOE added that it may opt to cut interest rates if global growth disappoints, but it may raise rates if economic growth picks up.

Officials from the BOE earlier this month voiced a dovish tone regarding monetary policy. Gertjan Vlieghe and Silvana Tenreyro said they would vote for a rate cut if economic data fails to strengthen after the general election on 12 December. BOE’s Carney also sounded dovish during the month.