(MENAFN– ecpulse) The Bank of England (BOE) decided today to hold both interest rate and asset purchases with the debut of the new Governor Mark Carney who released a statement.
The BOE opted to leave both interest rate at its record low of 0.50 percent and amount of asset purchases at 375 billion pounds, where minutes of the meeting due on July 17 will show how the voting was.
Last month, the majority resumed their resistance to calls from former governor King and MPC members Fisher and Miles whom asked for 25 billion pounds expansion in QE.
However, with the improvement in the economy and rise in inflation, calls for further expansion in APF may less this month.
Data released this week showed that manufacturing sector recorded its strongest growth in two years in June and services saw a surge to 27-month high, adding to signs that economic recovery is strengthening, while inflation, on the other hand, edged up to 2.7% in May, up from 2.4% in April.
"While recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care - and from rescue to recovery," Osborne said last month.
The British economy managed to escape a triple-dip recession after expanding 0.3 percent in the first three months of this year.
Carney is pretty lucky to receive the charge of the bank in an economic situation showing a pickup in recovery, yet he still has to face challenges stemming from recession and debt crisis risks in the euro area as well as austerity pledges confirmed in more than occasion by U.K. Chancellor of the Exchequer George Osborne.
Osborne has announced a massive 11.5 billion pounds budget cut for the election year 2015-16.
The British Chambers of Commerce said in a survey in London on Tuesday that Carney has to focus on boosting lending to help the U.K. to carry on its recovery trip.
The 48-year governor is expected to introduce his new polices at the inflation report news conference on August 7 which will be his first major media appearance.
Although the BOE is not used to release a statement when there is no change in monetary policy, it issued a statement showing that “the Committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May Report. The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”
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