Bank of England keeps rates a historic lows despite nearly hitting their unemployment ‘forward guidance’ level

The Bank of England have decided to keep rates at their historic low of 0.5% – which means that savers have been crushed by low/no savings rates for nearly five years in a row- but who cares about savers any more right?

From the release:

The Bank of England’s Monetary Policy Committee today voted to maintain Bank Rate at 0.5%.

And no more ‘additional’ money printing… for now:

The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.

The Committee reached its decisions in the context of the monetary policy guidance announced alongside the publication of the August 2013 Inflation Report.

And we get to hear just how the BoE have gotten it so wrong regards to inflation forecasting next week:

The Committee’s latest economic projections will appear in the forthcoming Inflation Report to be published at 10.30 a.m. on Wednesday 12 February.

It’s worth remembering just what the unemployment threshold for higher rates is:

In particular, the MPC intends not to raise Bank Rate from its current level of 0.5% at least until the Labour Force Survey headline measure of the unemployment rate has fallen to a threshold of 7%, subject to the conditions below.  The MPC stands ready to undertake further asset purchases while the unemployment rate remains above 7% if it judges that additional monetary stimulus is warranted.

And at last check the unemployment rate was 7.1% and expected to be below 7% in the next couple of months – at which point the BoE will promptly lower the threshold to 6.5% or dump it altogether – that’s just what central banks do, because rates can never be aloud to rise ever again.

Link to this article: : http://www.goldmadesimplenews.com/analysis/bank-of-england-keeps-rates-a-historic-lows-despite-nearly-hitting-their-unemployment-forward-guidance-level-12454/

Posted by on Feb 6 2014. Filed under Analysis. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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