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Bank of England holds rates amid darker outlook

Bank of England holds rates amid darker outlook

The Bank of England on Thursday held its base interest rate at an all-time low of 0.5 percent but refrained from pumping more money into the economy despite growing concerns about sluggish growth.
The decision was expected despite discouraging figures this week showing muted activity in the dominant services sector and in manufacturing.
The market now must wait until Sept. 21, when the Bank's Monetary Policy Committee publishes minutes of its latest meeting, to see how many of the nine members voted for more stimulus.
The Bank's program of asset purchases, known as quantitative easing, paused in December 2009 after 200 billion pounds ($320 billion) had been spent.
At the committee's August meeting, Adam Posen was alone among the members in voting for an additional 50 billion pounds in stimulus.
"We would expect that the growth outlook would need to deteriorate further for the MPC to go down this route, not least because inflation remains significantly above target and is expected to rise further in the near term," analysts at Barclays Capital said Thursday in a research note.
Britain's economic output grew by only 0.2 percent in the second quarter, and the government has acknowledged that growth forecasts will be downgraded.
"If anything, a darkening of growth prospects on the back of weakness, both on the domestic and international front, has raised the chances of more (quantitative easing)," said Nida Ali, economic adviser to the Ernst & Young ITEM Club. "While the case for this isn't strong enough yet, it has certainly gone from being a back up option to a genuine possibility."


Updated : 2021-03-05 22:55 GMT+08:00