UK: BoE on Hold, Carney Insights

Posted February 7, 2013 by rvillareal

• There was no major surprise that the MPC today again voted to maintain Bank Rate at 0.5%. More contentious was the decision by the MPC not to enlarge the size of its asset purchase program any further.
• Surprisingly, however, a statement was offered suggesting further action could occur if warranted.[private]
• More notable was the testimony today made by Dr Carney who takes the helm of the BoE in July. In contrast to some thinking, Dr Carney did not suggest that a major rethinking of the BoE policy tools or its remit was needed.
• Instead, he underlined his commitment to preserving price stability while suggesting that the greater policy flexibility he wishes is actually already available to the BoE. 
• DE View: Dr Carney’s comments do not suggest that he envisages making large or immediate changes to policy-making and policy thinking.  Instead he may be wishing to create greater leeway to keep policy on hold for longer than may otherwise be the case.

BoE Feb 7[/private]