British pound slips as BoE keeps rates historically low
By Tom Wilson
LONDON -The British pound slipped against the dollar and the euro on Thursday after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0 , 1%, as expected.
The British pound fell 0.4% against the dollar to $ 1.3907. It slipped 0.5% against the euro to 85.90 pence, a day after hitting its highest level against the single currency since early April.]
The BoE said its monetary policy committee voted 8 to 1 to keep its government bond buying program at 875 billion pounds ($ 1.2 trillion). the MPC voted 9-0 to keep the bank rate unchanged and to leave its £ 20 billion stock of corporate bond purchases unchanged.
The yield on UK two-year gilts fell 1 basis point to 0.076%, a session low, after the decision.
Economists had not expected any policy changes from the BoE while waiting to see whether a surge in post-lockdown inflation turns out to be transitory and whether unemployment rises when the government cuts its protection program. ’employment.
“There is absolutely no sign in the minutes or the statement that the MPC is considering an early end of QE, ”said Stephen Gallo, European head of foreign exchange strategy at BMO Capital markets.
“The answer in the GBP for that MPC is entirely appropriate, although it is clear from the discussions that the larger MPC takes rising inflationary pressures more seriously.
Sterling investors focused on signs of concern over a recent rise in UK inflation, which has exceeded the central bank’s 2% target and is expected to rise as the country wakes up its saving his sleep from coronavirus.