Central Banks

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The Bank of England MPC at it's September meeting voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously to maintain corporate bond purchases at £20 billion and government bond purchases at £875.

 BankofEngland

Highlights:

Bank of England announced  September 23 2021 monetary policy decision

  • Unchanged at prior 0.10%
  • Official bank rate votes 0-0-9 vs 0-0-9 expected
  • Gilts Asset purchase target £875 bn vs £875 bn expected
  • Corporate bond target £20 bn vs £20 bn expected

United Kingdom Interest Rate

Statement Breakdown 

  • Gilts purchases vote 7-2 (Saunders and Ramsden dissented)
  • UK Q3 GDP expectations revised down by around 1% since August
  • Downward revision reflects emergence of supply constraints on output
  • Estimate of underlying pay growth has picked up, to above pre-pandemic rate
  • Uncertainty around labour market outlook has increased
  • Questions on how things will be after furlough program ends at the end of Sept
  • BOE will deliberate said developments in November
  • Inflation to rise further in near-term, to slightly above 4% in Q4
  • Central expectation is that current elevated cost pressures will prove transitory
  • Existing stance of monetary policy remained appropriate

Slight change to the forward guidance slightly hawkish

Prior

The Committee judges that, should the economy evolve broadly in line with the central projections in the August Monetary Policy Report, some modest tightening of monetary policy over the forecast period is likely to be necessary to be consistent with meeting the inflation target sustainably in the medium term.

Key change

At its previous meeting, the Committee judged that, should the economy evolve broadly in line with the central projections in the August Monetary Policy Report, some modest tightening of monetary policy over the forecast period was likely to be necessary to be consistent with meeting the inflation target sustainably in the medium term. Some developments during the intervening period appear to have strengthened that case, although considerable uncertainties remain. The Committee will be monitoring closely the incoming evidence regarding developments in the labour market, and particularly unemployment, wider measures of slack and underlying pay pressures; the extent to which businesses pass on wage and other cost increases, as well as medium-term inflation expectations.

 

Source: Bank of England

From The TradersCommunity News Desk

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