On Air Now

Listen

Listen Live Now » 101.9 FM Central Wisconsin

Weather

Current Conditions(Wausau,WI 54403)

More Weather »
35° Feels Like: 28°
Wind: NW 9 mph Past 24 hrs - Precip: 0.07”
Current Radar for Zip

Today

AM Snow Showers 43°

Tonight

Partly Cloudy 24°

Tomorrow

Mostly Sunny 46°

Alerts

Bank of England keeps powder dry before guidance announcement

A bus passes the Bank of England in the City of London February 23, 2013. REUTERS/Neil Hall
A bus passes the Bank of England in the City of London February 23, 2013. REUTERS/Neil Hall

LONDON (Reuters) - The Bank of England made no changes at its second policy meeting under its new governor, Mark Carney, which ended on Thursday, keeping interest rates at 0.5 percent and leaving its bond-buying program on ice.

The bank also made no announcement about an expected shift in strategy to help Britain's economic recovery, under which it could start providing guidance on how long interest rates are likely to stay at their record low.

Finance minister George Osborne has asked Carney and the rest of the BoE's policymakers to report to him next Wednesday - at the same time as the bank's quarterly economic update - on the merits of bringing so-called forward guidance to Britain.

The Monetary Policy Committee issued no policy statement on Thursday, unlike at the first meeting chaired by Carney a month ago when it warned investors against betting on a rise in interest rates too soon.

Details of the latest discussions and the breakdown of votes by the nine rate-setters are due to be released on August 14.

At its previous meeting, on July 3-4, the MPC voted 9-0 against buying more bonds. Two members who previously supported more asset purchases held off from calling for more quantitative easing, pending the discussions on the new strategy.

Having kept borrowing costs at rock-bottom since 2009 and spent the equivalent of a quarter of British gross domestic product on government bonds, the Bank of England is turning to guidance as a new way to get Britain's economy back to health.

Signs of a turnaround have begun to appear in recent months.

A reading of the country's manufacturing sector in July was stronger than even the most optimistic forecast in a Reuters poll.

But the economy remains more than 3 percent smaller than before the financial crisis and is vulnerable to interest rates creeping back up in financial markets, especially at the U.S. economy picks up and exerts pressure on British debt prices.

The MPC's decision comes shortly before the conclusion of the European Central Bank's monthly policy meeting, which could provide more detail on its own plans to persuade markets that an interest rate hike is not on the cards.

The U.S. Federal Reserve offered no hint after its latest policy meeting ended on Wednesday that it plans to trim its stimulus program soon, saying the U.S. economy is recovering but still needs support.

(Editing by Jeremy Gaunt)

Comments