» BoE Stays in Neutral Decision Economics

BoE Stays in Neutral

Posted December 15, 2016 by rvillareal

Summary Highlights

  •  Surprising none, the BoE kept policy on hold once again after the latest MPC meeting, keeping Bank Rate at 0.25% and adhering to the on-going asset purchase program.  More notably, the BoE signaled a neutral stance, thereby echoing the swing in thinking seen at the November meeting.   
  • More puzzling was the lack of added inflation risks that the recent bout of commodity price strength may be wreaking as well as any discussion about the growth in household debt.
  • Indeed, it is also notable that the MPC is paying little heed to the rising household debt backdrop in the UK. This omission is all the more puzzling as the other arm of the BoE, the Financial Policy Committee (FPC), went to great odds to highlight the risks from credit developments
  • This is all the more important at the current juncture, for an MPC still trying to understand the resilience of the economy in the wake of the Brexit shock. Perhaps the MPC is missing the very obvious cause – consumer lending!

                                             [private]BoE Dec15[/private]