The Bank of England announced on Thursday that it was maintaining its monetary policy, taking the market by surprise with an interest rate that remains at a historical low of 0.1%, but signaled a probable “necessary” increase in the coming months.
The institute revised its inflation forecasts upwards (4.25% in 2021, 3.5% in 2022), but “the majority of the members of the Monetary Committee considered that our monetary policy continued to be adequate,” says the Bank in the minutes of your meeting.
If the British economy evolves according to the BoE forecasts, “it will be necessary to raise the interest rate to reach our inflation target of 2% in the coming months,” the Bank warns.
Many observers expected the Bank to act, either by raising rates or cutting its massive £ 895 billion asset purchase program.
At the Bank of England, the proponents of tight monetary policy (hawks) and those of continued support for the economy (pigeons) were clearly at odds.
Two of the nine members of the monetary policy committee voted in favor of a hike in November, and three in favor of a reduction in the asset purchase program.
Some observers had expected Bank Governor Andrew Bailey and new chief economist Huw Pill to join the hawks, but voted to keep monetary policy flexible in November.
In 2014, the Bank was criticized for sending mixed signals, which shook the markets.
On December 16, the result of the last BoE meeting for 2021 will be shared.
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