On Wednesday, 18 November, the Bank of England published the minutes of the meeting held on November 4-5, at which the Committee on monetary policy has kept the rate of compulsory reserves of commercial banks at 0.50%. The decision was taken unanimously. At the same meeting it was decided (seven votes out of nine) to increase purchases of assets of the private sector by the central bank reserves to 25 billion pounds to 200 billion pounds. One member proposed to increase purchases by 40 billion pounds.
In the third quarter UK GDP unexpectedly fell. Despite the fact that the data may be revised for the better, economic activity remains at a lower level than projected earlier. Moreover, available data indicate that the GDP will be weak in the fourth quarter. Committee of the Bank of England also expects that inflation will be significantly below the target level of 2% most of the projection period. It is expected that the recovery in economic activity will be slow, and a large stock of spare capacity maintained in the medium term.
Most members believed that increase in purchases should accelerate the reduction of the stock of spare capacity and to facilitate the return of inflation to the target level.
In the third quarter UK GDP unexpectedly fell. Despite the fact that the data may be revised for the better, economic activity remains at a lower level than projected earlier. Moreover, available data indicate that the GDP will be weak in the fourth quarter. Committee of the Bank of England also expects that inflation will be significantly below the target level of 2% most of the projection period. It is expected that the recovery in economic activity will be slow, and a large stock of spare capacity maintained in the medium term.
Most members believed that increase in purchases should accelerate the reduction of the stock of spare capacity and to facilitate the return of inflation to the target level.
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