(menafn – ecpulse)
Bank of England (BoE) policy makers opted to leave both borrowing cost and APF steady in April despite calls from Posen and Miles to boost stimulus.
The BoE kept both interest rate and APF unchanged at 0.50% and 325 billion pounds, where in March there had been a split as Posen and Miles said the APF should have been increased by additional 25 billion pounds.
The Monetary Policy Committee predicts the stimulus program to take another to be completed, where the amount of the non-standard measures will remain under review for possible change if needed.
BoE policy maker David Miles said the exit point of stimulus will depend on inflation prospects while the first step in tightening is more likely to be raising interest rate.
Dale also expressed his worries that inflation may slow less than predicted especially amid tensions in the Middle East which may cause an upside pressure from oil prices.
In addition, Dale stressed on the threats posed from the European debt crisis despite the steps taken by euro area officials which managed to ease tensions in financial markets, stating that “concerns about the indebtedness and competitiveness of some euro-area countries persisted and remained a key influence on financial markets.”
Details of today's decision will be published in the minutes on April 18.
Perhaps one of the key challenges this year is the rise in joblessness as unemployment climbed to the highest level in 16 year at 8.4% to offset the positive impact of the decline in inflation to 3.4% in February, the lowest in 15 months, from 3.6% in January.
Osborne in his annual budget announced that unemployment would remain high at 8.7% this year, while he expects inflation to retreat to 1.9% by the end of 2012.
Yet, Osborne in his annual budget raised growth forecasts to 0.8% this year from previous estimates of 0.7%, referring that the economy will avoid a renewed recession after shrinking in the last quarter of 2011.
On the other hand, King said there will be a “zigzag” pattern of GDP, referring that the British economy may shrink in the current quarter.
U.K. 4q GDP final reading was revised down to -0.3% from a preliminary of -0.2%, while it was also downwardly revised to 0.5% on the year from a preliminary of 0.7%.
Meanwhile, the GBP/USD is trading lower for a third consecutive session around 1.5825 compared with the day's opening level of 1.5887.