Bank of England Keeps Interest Rate Unchanged

In the minutes of meeting, the nine members of the Monetary Policy Committee of the Bank of England unanimously agreed to keep the key interest rate at 0.5% this month.

Governor Mark Carney’s earlier direction focused on unemployment, which was replaced by the amount of additional capacity in the economy, to keep borrowing costs low.

The panel observed the risk of financial disparities, particularly in the housing market. Indications of a shortage of property for sale and reduction in mortgage approvals were remarkable.

Retail Sales

After the minutes were announced and data indicated retail sales increased 1.3% in April, the pound climbed for a 5th day. During the past year, sterling has risen over 11% against the dollar.

The minutes restated views by officials that once rate increases begin, the steps will be measured and that borrowing costs are to remain lesser than the historical average for some time.

The Bank of England said that the Monetary Policy Committee has got a variety of views regarding slackness in companies and in the labor market and that policy makers have a range of opinions on the suitable path of monetary policy.

Rate Increases

Investors expect increase in rate of interest in the first half of 2015.

As per forecasts revealed last week, the Bank of England predicts the U.K. economy to grow by 3.4% during current year and 2.9% during next year. Inflation rate is expected at 1.8% in both years.