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  • BoE leaves Bank Rate at 0.1%; says its MPC judges it will be necessary over coming months to increase Bank Rate to return CPI inflation sustainably to 2% target
Ekonomické zprávy
04.11.2021

BoE leaves Bank Rate at 0.1%; says its MPC judges it will be necessary over coming months to increase Bank Rate to return CPI inflation sustainably to 2% target

The Bank of England (BoE) announced its Monetary Policy Committee (MPC) voted by a majority of 7-2 to keep the Bank Rate at 0.1 percent at its November meeting, as economists expected.

The MPC also voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases at GBP20 billion and voted by a majority of 7-6-3 to continue with the existing programme of UK government bond purchases at GBP875 billion, thus maintaining the total target stock of asset purchases at GBP895 billion.

In its statement, the BoE notes:

- MPC judged that existing stance of monetary policy remained appropriate;

- MPC updated central projections for activity and inflation are set out in accompanying November Monetary Policy Report. The projections are conditioned on asset and energy prices averaged over 15 days to 27 October. This gives a market-implied path for Bank Rate that rises to around 1% by the end of 2022;

- While bottlenecks will continue to restrain growth somewhat in near term, global and UK GDP are nonetheless expected to recover further from the Covid effects;

- UK GDP is projected to get back to its 2019 Q4 level in 2022 Q1;

- Wholesale gas prices have risen sharply since August. CPI inflation is now expected to peak at around 5% in April 2022, materially higher than expected in August;

- Upward pressure on CPI inflation is expected to dissipate over time, as supply disruption eases, global demand rebalances, and energy prices stop rising. As result, CPI inflation is projected to fall back materially from second half of next year;

- CPI inflation is projected to be a little above 2% target in two years’ time and just below target at the end of the forecast period;

- Near-term uncertainties remain, especially around the outlook for labour market, and extent to which domestic cost and price pressures persist into the medium term;

- MPC judges that, provided incoming data, particularly on labour market, are broadly in line with central projections in November Monetary Policy Report, it will be necessary over coming months to increase Bank Rate in order to return CPI inflation sustainably to 2% target

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