BoE keeps policy rate and bond program unchanged, likely to stand pat for long time – Nordea Bank

As was widely anticipated, the Bank of England kept its policy rate and bond program unchanged on Thursday. The Monetary Policy Committee was split with a 6-2 vote in its decision to keep the bank rate on hold. Two members voted for a rate hike by 25 basis points. The MPC voted unanimously to keep the stock of government bonds at GBP 435 billion and the stock of corporate bonds at GBP 10 billion.

The BoE, in its new inflation report, downwardly revised the GDP growth projection slightly compared to the earlier forecast in May. The inflation projection was slightly revised up for the whole of this year but unchanged longer out. The central bank continues to expect inflation to overshoot the 2 percent target through the second quarter of 2020.

The minutes from the MPC meeting reiterated that the central bank might be required to hike interest rates faster than the very gentle rising path suggested by the market yield curve. But all members agreed that any rises in the bank rate would be expected to be at a gradual rate and to a restricted extent, noted Nordea Bank in a research report.

In all, the Bank of England is expected to keep the interest rates and its QE program unchanged for long, stated Nordea Bank. The growth outlook is subdued and it is difficult to see domestic price pressure building to any vital extent despite the low jobless rate. However, the case for a rate hike has strengthened in recent months.

At 22:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bearish at -110.349, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 19.084. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest