The Bank of
England (BoE) announced on Thursday that its Monetary Policy Committee (MPC) voted
by a majority of 8-1 to keep
the Bank Rate unchanged at 5.00 per cent
at its September meeting. Meanwhile, one MPC member preferred to decrease the benchmark rate by 25 basis points. The outcome was in line
with markets’ anticipations.
In its policy statement,
the BoE notes:
- Its MPC also voted unanimously to decrease the stock of UK government bond
purchases held for monetary policy purposes, and financed by the issuance
of central bank reserves, by GBP100
billion over the next 12 months, to a total of GBP558 billion;
- MPC sets
monetary policy to meet the 2% inflation target, and in a way that helps to
sustain growth and employment;
- MPC adopts a
medium-term and forward-looking approach to determine monetary stance required
to achieve the inflation target sustainably;
- MPC’s deliberations
have been supported by the consideration of a range of cases, to which
different probabilities and different risks can be attached;
- There has generally been limited
news in UK economic indicators relative to MPC’s expectations in August;
- In the
absence of material developments, a gradual approach to removing policy
restraint remains appropriate;
- Monetary
policy will need to continue to remain restrictive for sufficiently long until
the risks to inflation returning sustainably to the 2% target in the medium
term have dissipated further;
- MPC continues to monitor closely the risks
of inflation persistence and will decide the appropriate degree of monetary
policy restrictiveness at each meeting.