BOE Signaled To Keep Rates Low For Longer Than Expected
The BOE unveiled in minutes for the July meeting that members voted 7-2 to keep the Bank rate at 0.5%. Spencer Dale and Martin Weale favored raising interest rates while Adam Posen called for additional easing beside the existing asset-buying package of 200B pound. The outcome was similar to previous months and was widely anticipated. The central bank saw weakening in economic outlook in the third quarter and reiterated the stance that current inflationary pressures are temporary. Interest rates will likely stay low for longer than previously expected.
UK’s GDP recovered to +0.5% q/q in 1Q11 from -0.5% in the prior quarter. Yet, the growth magnitude remained minimal. Policymakers noted that recent ‘indicators had pointed toward continued modest underlying UK GDP growth in the second quarter and, more tentatively, to some softening in the outlook for the third quarter’.