The Governor and Company of the Bank of England is a state owned institution acting as the central bank of the United Kingdom which convenes the Monetary Policy Committee that is responsible for managing the monetary policy of the country. It was established in 1694 to act as the English Government's banker, and to this day it still acts as the banker for the UK Government. The Bank's building is located in the City of London, in Thread needle Street and hence it is sometimes known as The Old Lady of Thread needle Street or the Old Lady
The Bank of England will probably resist calls for another interest-rate cut today as policy makers gauge the effects of last month's reduction on the economy, a survey of economist’s shows. The nine-member Monetary Policy Committee, led by Governor Mervyn King, will keep the bank rate at 5.5 percent. The rest forecast a quarter-point cut. The bank will announce the decision at noon in London.
Economists predict officials will wait until next month before lowering rates again as banks pare lending, cooling economic growth and deepening a slowdown in the housing market. The bank is weighing those risks against the threat of inflation after oil costs rose to a record $100 a barrel last week.
The pound has fallen on expectations of further rate cuts. Against the euro, the currency shared by 15 European countries that buy about half of British exports, it's dropped 11 percent since the start of July. The pound has fallen 6 percent against the dollar since reaching a 26-year high of $2.1162. Investors are betting on a cut today, derivatives trading shows. A Credit Suisse index of probability derived from overnight indexed swap rates showed the odds on a quarter-point reduction to 5.25 percent were 61 percent yesterday, compared with 50 percent the day before.
The Bank of England's benchmark rate is the highest among the Group of Seven industrialized nations. The U.S. Federal Reserve has trimmed its rate three times to 4.25 percent. The European Central Bank will keep its benchmark at 4 percent today. The U.K. central bank trimmed its rate by a quarter points in December in the first unanimous vote for a reduction since the aftermath of the Sept. 11, 2001, terrorist attacks. ``Financial market turmoil, and the consequent tightening of credit conditions, had increased the downside risks to activity,'' policy makers said in the minutes of the decision.
Banks became reluctant to lend to each other because of concern about losses on U.S. sub prime mortgage investments. U.K. banks plan to make fewer loans to consumers and companies in the first quarter, the central bank's quarterly survey on credit conditions showed on Jan. 3.
House prices fell in the fourth quarter from the previous three months, the first drop in seven years, according to HBOS Plc. Energy and food prices should keep inflation above target in the short-term, but slowing demand growth should reduce the pressure on supply capacity, bringing inflation back to target. Inflation stayed above the central bank's 2 percent target for a second month in November. U.K. gasoline prices rose to a record this week after the cost of crude oil reached $100.09 a barrel, and RWE AG's Npower business, Britain's fourth-biggest energy retailer, raised gas prices by an average 17 percent and electricity prices by 13 percent this month.
Economists predict the Bank of England will move in February, when it publishes new forecasts for economic growth and inflation. ``There's no urgency to continue cutting now,'' said ABN Amro's White. ``The fall in sterling, pay settlements and rising power prices all suggest that we could see another hump in inflation. It's a very difficult situation for the bank.''
For more details on Bank of England May Keep Rate Unchanged After Cut visit www.halfvalue.com and www.halfvalue.co.uk For more information on books visit www.Lookbookstores.com
The Bank of England will probably resist calls for another interest-rate cut today as policy makers gauge the effects of last month's reduction on the economy, a survey of economist’s shows. The nine-member Monetary Policy Committee, led by Governor Mervyn King, will keep the bank rate at 5.5 percent. The rest forecast a quarter-point cut. The bank will announce the decision at noon in London.
Economists predict officials will wait until next month before lowering rates again as banks pare lending, cooling economic growth and deepening a slowdown in the housing market. The bank is weighing those risks against the threat of inflation after oil costs rose to a record $100 a barrel last week.
The pound has fallen on expectations of further rate cuts. Against the euro, the currency shared by 15 European countries that buy about half of British exports, it's dropped 11 percent since the start of July. The pound has fallen 6 percent against the dollar since reaching a 26-year high of $2.1162. Investors are betting on a cut today, derivatives trading shows. A Credit Suisse index of probability derived from overnight indexed swap rates showed the odds on a quarter-point reduction to 5.25 percent were 61 percent yesterday, compared with 50 percent the day before.
The Bank of England's benchmark rate is the highest among the Group of Seven industrialized nations. The U.S. Federal Reserve has trimmed its rate three times to 4.25 percent. The European Central Bank will keep its benchmark at 4 percent today. The U.K. central bank trimmed its rate by a quarter points in December in the first unanimous vote for a reduction since the aftermath of the Sept. 11, 2001, terrorist attacks. ``Financial market turmoil, and the consequent tightening of credit conditions, had increased the downside risks to activity,'' policy makers said in the minutes of the decision.
Banks became reluctant to lend to each other because of concern about losses on U.S. sub prime mortgage investments. U.K. banks plan to make fewer loans to consumers and companies in the first quarter, the central bank's quarterly survey on credit conditions showed on Jan. 3.
House prices fell in the fourth quarter from the previous three months, the first drop in seven years, according to HBOS Plc. Energy and food prices should keep inflation above target in the short-term, but slowing demand growth should reduce the pressure on supply capacity, bringing inflation back to target. Inflation stayed above the central bank's 2 percent target for a second month in November. U.K. gasoline prices rose to a record this week after the cost of crude oil reached $100.09 a barrel, and RWE AG's Npower business, Britain's fourth-biggest energy retailer, raised gas prices by an average 17 percent and electricity prices by 13 percent this month.
Economists predict the Bank of England will move in February, when it publishes new forecasts for economic growth and inflation. ``There's no urgency to continue cutting now,'' said ABN Amro's White. ``The fall in sterling, pay settlements and rising power prices all suggest that we could see another hump in inflation. It's a very difficult situation for the bank.''
For more details on Bank of England May Keep Rate Unchanged After Cut visit www.halfvalue.com and www.halfvalue.co.uk For more information on books visit www.Lookbookstores.com
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