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Bank of England holds steady on stimulative monetary policy

bank of englandThe Bank of England said earlier this month that it intends to maintain its stimulative monetary policy until economic conditions improve, unless doing so would threaten price or financial stability.

The central bank’s Monetary Policy Committee does not intend to raise the bank rate from its current level of 0.5 percent until the unemployment rate falls below seven percent.

MPC would change its course of action, however, if Consumer Price Index inflation will likely rise above the two percent threshold, if medium-term inflation expectations are no longer well-founded or if the Financial Policy Committee finds that the current monetary stance poses a threat to financial stability that cannot be contained through policy options alone.

Additionally, the MPC plans to continue to set the bank rate level and asset purchase program size every month, accounting for the criteria. Its subsequent action, if any of the three “knockout” conditions were breached, would depend on its assessment at the time.

The committee also voted earlier this month to maintain the official bank rate on commercial bank reserves at 0.5 percent and to maintain asset purchases at $582 billion.

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