Bank of England keeps powder dry before guidance announcement

LONDON Thu Aug 1, 2013 7:02am EDT

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LONDON Aug 1 (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 programme 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 Aug. 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 programme soon, saying the U.S. economy is recovering but still needs support.

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Comments (1)
Nelsonbaker wrote:
Freeh and the Don
FBI Director Louis Freeh was with Vince Foster at the White House the day Foster was murdered there. The FBI wrongly told the media and the investigators to report that Foster left the White House alive. I am the Yale Law, NY Bar attorney that has dedicated his life to fighting for the films of Foster and Freeh that prove Foster was a White House murder (and there is 31 Trillion off shore worth killing for). I am the attorney that filed the FOIA request for the White House Surveillance films of Freeh and Foster.
In addition the FBI planted a fake “suicide ” note at the crime scene (Oxford Historians suggest Hillary planted the forgery at the White House in her lover’s breifcase, remember Hitler also wrote a fake suicide note for his lover, read a newish book, Hitler’s Niece). My panel of experts (I also FOIAed the fake “suicide” note and I am not a quitter like Donald Trump who reversed and never named his experts and their findings) included Rice, Scalize and Professor Alton.
My handwriting experts said the “suicide” note was a clear forgery see Reuteurs 10/26/95. This still can not be reported in Wikipedia! Professor Alton an Oxford Don has been banned from Wikipedia by Freeh! No Wiki page for an Oxford Don. Our FBI protects the holders of off-shore money (31 Trillion). The Fed should reverse and seize !

Aug 01, 2013 7:47am EDT  --  Report as abuse
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