The BoE also voted to keep the Asset Purchase Target unchanged at 375b, also as expected.
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In the minutes from their latest policy meeting, rate-setters focused on a renewed fall in global oil prices and slower rises in wages.
“The committee concluded that the medium-term outlook for price stability remains positive, with inflation forecast to be close to the lower bound of the 3 — 6 percent medium-term objective range.
Expectations for when the first United Kingdom rate rise will eventually come vary significantly, although most economists believe a hike will be made before 2017 – at odds with forecasts in the Bank’s own November inflation report. They voted 8-1 again to keep interest rates at 0.5 percent, where they have been since 2009. Twelve-month CPI inflation remained at -0.1% in October, a little more than 2 percentage points below the inflation target.
The Bank of England on Thursday might seek to challenge the view in financial markets that it is still a very long way from raising interest rates, almost seven years after it cut them to a record low.
In Westpac’s weekly note titled “Walking a Tightrope”, it says New Zealand’s central bank will likely “carefully tread the fine line between keeping its options open by not removing the possibility of further rate cuts, and at the same time not explicitly signalling that further cuts are likely”. The U.K. rate should be higher than the Fed at the end of next year as the USA elections will force the American central bank to avoid any monetary policy decisions while the presidential race heats up.
He said: “If the USA does decide to hike next week…”
“The market’s trying to get ahead of a possibly volatile reaction”. Gross said that the zero interest rate policy adopted by nearly all central banks are turning savers away which would impact future consumption patterns and hurt global growth trajectory.
The uneven economic recovery in advanced economies will further contribute to the divergence in monetary policies and hence financial markets should gear up for this.
The dinar, which has lost over 1 percent against the euro since November 2, mainly on seasonal demand for the European currency and anticipation of Fed tightening, was largely steady after the rate decision, trading at 122.2 to the euro at 1110 GMT. Korea’s Kospi rose 0.2% as the Bank of Korea kept rates unchanged at 1.5%, one of the few equity benchmarks making gains in Asia-Pacific.
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The Treasury Department auctioned $28 billion in three-month bills at a discount rate of 0.280 per cent, up from 0.215 per cent last week.
