Pound Loses Ground After BoE Holds Rates

UK interest rates have been held at their record low of 0.5% for another month by the Bank of England.

The Bank also kept the size of its bond-buying stimulus programme unchanged at £375bn.

No changes had been expected to either rates or the bond-buying measure, despite recent evidence that the UK economy is continuing to recover.

Most economists do not expect the Bank to increase interest rates until the first half of next year.

The recent fall in the rate of inflation has also reduced any pressure on the Bank’s monetary policy committee (MPC) to raise rates. The UK’s inflation rate fell to 1.7% last month, which was a four-year low and below the Bank’s target of 2%.

Investec chief economist Philip Shaw said: “For now, with the economy growing respectably but not roaring away, we see it likelier than not that the MPC will avoid tightening policy this year, especially with inflation expected to remain below target over the medium term.”

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The second quarter of 2015 currently looks the prime candidate for when the Bank of England starts to inch interest rates up – given both the inflation forecasts contained in the Bank of England’s February Quarterly Inflation Report and the general drift of comments made by MPC members in recent weeks.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza