LONDON (Dow Jones)--The Bank of England's Monetary Policy Committee Thursday voted to boost its bond-buying program by GBP50 billion to GBP175 billion, suggesting it still harbors concerns about the sustainability of recent signs of economic improvement.
But it kept its main interest rate on hold at a record low of 0.5%.
All eyes will now turn to the bank's quarterly Inflation Report and press conference Wednesday, when it will unveil its latest forecasts for inflation and output, for a clearer indication of the policy outlook.
Economists had been highly divided over the likely outcome of the meeting. Sluggish M4 money supply growth and a larger than expected contraction in U.K. output in the second quarter had persuaded a majority of economists polled by Dow Jones Newswires that the MPC would extend its quantitative easing program, under which it has already bought GBP125 billion of mostly government bonds.
But a large minority had tipped the MPC's nine members to stay on hold Thursday, with many of those saying that more action at a later date remained a distinct possibility. Figures Wednesday supported that view, showing that the dominant U.K. services sector expanded for a second straight month in July.
All those polled thought the BOE would keep its benchmark interest rate at the current record low of 0.5%.
-By Natasha Brereton, Dow Jones Newswires; +44 20 7842 9254; natasha.brereton@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=lwy%2FldcGHKHpqaunEKCa2g%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
August 06, 2009 07:06 ET (11:06 GMT)
But it kept its main interest rate on hold at a record low of 0.5%.
All eyes will now turn to the bank's quarterly Inflation Report and press conference Wednesday, when it will unveil its latest forecasts for inflation and output, for a clearer indication of the policy outlook.
Economists had been highly divided over the likely outcome of the meeting. Sluggish M4 money supply growth and a larger than expected contraction in U.K. output in the second quarter had persuaded a majority of economists polled by Dow Jones Newswires that the MPC would extend its quantitative easing program, under which it has already bought GBP125 billion of mostly government bonds.
But a large minority had tipped the MPC's nine members to stay on hold Thursday, with many of those saying that more action at a later date remained a distinct possibility. Figures Wednesday supported that view, showing that the dominant U.K. services sector expanded for a second straight month in July.
All those polled thought the BOE would keep its benchmark interest rate at the current record low of 0.5%.
-By Natasha Brereton, Dow Jones Newswires; +44 20 7842 9254; natasha.brereton@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=lwy%2FldcGHKHpqaunEKCa2g%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
August 06, 2009 07:06 ET (11:06 GMT)
Sterling Plunges As BOE Expands Asset Purchase Scheme
Sterling Plunges As BOE Expands Asset Purchase Scheme
LONDON (Dow Jones)--The pound has fallen sharply after the Bank of England announced that it intends to expand its bond-buying program by GBP50 billion.
Sterling has dipped by over 0.8% to hit a low of $1.6833 against the dollar, while the euro jumped by nearly 1% against the pound to hit GBP0.8547.
Economists had been split in their predictions on what the BOE was likely to decide at its policy meeting this month.
-By Katie Martin, Dow Jones Newswires; +44 (0) 207 842 9346; katie.martin@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=lwy%2FldcGHKHpqaunEKCa2g%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
August 06, 2009 07:11 ET (11:11 GMT)
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