As expected, it did not carry out any further interest rate hikes at this year’s first interest rate meeting at the Bank of England’s Monetary Council. At the same time, the Board made a direct reference to the new inflation report released at the same time as the robust external growth environment affecting the British economy, which is likely to rise above and beyond the previously expected rate.
In November last year, the British central bank raised its interest rate for the first time after 10 years, raising 0.25 percentage points to the current 0.50 percent rate.
As a result of the shock of a referendum won by the United States on EU membership in June 2016 by a narrow majority, the bank continued to increase 0.25 percentage points by 0.25 percentage points in August 2016, up 0.25 percent in November, up from the Bank of England in 1694 interest rate record – reduced its benchmark rate.
The British central bank also raised 435 billion pounds (more than 155,000 billion forints) into a government-leaked government bond purchasing framework of up to 375 billion pounds and issued a bounty billions of major asset purchase programs for corporate investment bonds.
According to a statement issued on Thursday at a February meeting, the Bank of England’s Monetary Council unanimously voted to maintain the base rate set in November and left unchanged the unbundled decision-making framework for asset purchase programs.
The Bank of England raised interest rates in July 2007 before raising interest rates last November. After this step, the British central bank base rate was 5.75 percent, ie the current 0.50 percent interest rate is less than a tenth of the last peak level.
At the same time as the new quarterly inflation report released at the time of announcing the results of the current interest rate conference, the British central bank stressed that the growth rate of the global economy was not as fast as it has been for seven years now and this will also boost the performance of the British economy. On the basis of this, the Bank of England forecasts its GDP forecast for this year’s GDP growth from 1.5 percent to 1.7 percent in the November inflation report last year, up from 1.7 percent to 1.8 percent next year.
In the opinion of the central bank, the expected growth rate of British wage growth in the British economy is also a driving force behind the robust external growth environment.
In view of all these, the Monetary Council of Bank of England stated that it considered monetary policy to be “tightened somewhat and somewhat” in the likelihood of the previous inflation report.
In November, the November inflation report referred to two additional, 0.25 percentage point interest rates on central bank interest rates.
The Monetary Board in Thursday’s new inflation report, however, emphasized that the favorable impact of broad-based global demand on the UK economy was an important factor in improving prognoses, given the uncertainties surrounding the termination of UK membership.
The Bank of England highlighted that since the 2016 EU referendum, the growth of the UK economy has slowed down to the last place in the seven largest industrialized economies (G7), although it was in the first place and the same “detachment process” and the growth rate of the investment value of the business sector.
Paul Hollingsworth, one of the largest London-based global financial and economic analysts in Capital Economics, British economics analyst, commented on Bank of England’s commentary on Thursday’s inflation reporting: the company’s reading says the Monetary Council of the Bank of England has prepared the ground for a new interest rate increase in May .
Capital Economics predicts that the British central bank will continue to raise two additional interest rates this year and close the year with a 1.25 percent base rate.