After chaotic months, Bank of England holds fire at meeting
ReutersLONDON -- The Bank of England announced no changes to interest rates or its bond-buying program and made no further statement on its policy on Thursday.
September 6, 2013, 12:35 am TWN
The BOE had been expected to take a breather following a hectic couple of months under new governor Mark Carney which has seen the economy show fresh signs of life.
The bank said its Monetary Policy Committee kept interest rates at a record low of 0.5 percent. It also made no change to its asset purchase program under which the BOE has spent 375 billion pounds' (US$586 billion) on British government bonds.
In one new piece of information for markets, the bank explained how it will reinvest proceeds from 1.9 billion pounds worth of maturing British government bonds from its stock of gilts bought under the program.
The BOE's September policy meeting — which unusually took place on Tuesday and Wednesday to allow Carney to attend the Group of 20 summit in Russia which started on Thursday — followed two landmark MPC gatherings.
In July, it took the unexpected step of warning financial markets against making premature bets on an interest rate hike. And in August it agreed its new forward guidance plan to keep rates on hold until Britain's unemployment rate falls to 7 percent, something the bank expects only in late 2016.
Signs of a surprisingly strong recovery in the economy, while a welcome change for policymakers, has added to skepticism in financial markets about the BOE's ability to keep rates at a record low of 0.5 percent for so long.
Strong manufacturing and services surveys this week prompted some economists to predict that growth in the third quarter could speed up to more than 1 percent, much stronger than the BOE's forecast of about 0.6 percent.
Rising market interest rates have raised the prospect of higher borrowing costs for consumers and companies that could hamper the still incipient recovery.