In the latest meeting of the Monetary Policy Committee, the bank held interest rates at 0.5% and kept its QE programme unchanged.
The pound dropped to $1.514, but markets jumped 50 points on the back of a continuation of cheap borrowing costs, only to rise again following the European Central Bank’s decision to keep eurozone rates low.
The committee said recovery remains weak by historical standards and a degree of slack is expected to persist for some time. Further, positive developments have been dampened by a sharp rise in the long term cost of borrowing in global markets, meaning the implied rise in the expected future path f bank rate was not warranted.
Rates have been at an historic low since March 2009, but last month markets brought forward their expectations for when rates would rise following the US Federal Reserve’s statement on when it would be withdrawing its QE programme.
The pound fell against the euro following the announcement, only to rise again following the ECB’s rates decision an hour and a half later.
Today’s was the first MPC meeting since Mark Carney took over as governor at the Bank of England.
