THE TAKEAWAY: Interest rates and asset purchase plan remain unchanged following BoE decision -> Showdown set for the next month’s BoE meeting -> GBD/USD barely reverses daily losses following release
The Bank of England held its key interest rate at 0.50% for the 37th straight month following its monthly meeting. It also kept the asset purchase target at 325 billion pounds. Both the interest rate and the asset purchase plan were decided as expected by analysts.
BoE Governor Mervyn King pushed for the 325 billion pounds of quantitative easing, because he said the UK’s predicament still feels like a crisis. The central bank’s board will likely take into account Q1 GDP numbers when debating the need for further stimulus and low interest rates at next month’s meeting.
UK inflation dropped to 3.4% in February from 3.6% the previous month, and the BoE maintains a 2% inflation forecast for the end of the year.
GBD/USD remained nearly unchanged following the BoE decision, rising only a few points after dropping 80 points earlier in the session. UK stocks seem unmoved in the short term by the BoE release, following an earlier day 30 point drop in the FTSE 100.