Friday, January 21

The Bank of England raises rates to 0.25%, but maintains the volume of asset purchases

The Monetary Policy Committee of the Bank of England has decided to raise the reference interest rate for its operations by 15 basis points, which will now stand at 0.25%, as announced by the institution, which has kept the volume unchanged of its purchase programs in 895,000 million pounds (1.05 billion euros).

The ECB reduces economic stimuli “moderately” in the face of rising inflation and recovery

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The decision to undertake the rise in interest rates from the historical low of 0.1% to 0.25% was adopted by a majority of 8 votes to 1, since Silvana Tenreyro voted against the increase, preferring to maintain the rate at 0.1%, while the nine members of the Committee supported continuing with the same volume of purchases.

In its analysis, the Bank of England takes note of the appearance of the omicron variant, noting that it appears to be much more transferable than previous ones, posing new risks to public health and causing a drop in global prices of risk assets. , although later they have recovered to a great extent.

Regarding inflation, which in November reached 5.1%, its highest level since September 2011, the central bank expects it to remain around 5% for most of the winter period and reach a maximum of around 6% in April 2022, although it maintains confidence that inflation will decline in the second half of next year.

“Given the lag between changes in monetary policy and their effects on inflation, the Committee, in judging the appropriate policy stance, will always focus on the medium-term inflation outlook, including medium-term inflation expectations, in instead of the factors that are likely to be transitory, “the institution explained, acknowledging that” there are some signs of greater persistence in domestic price and cost pressures. ”

In any case, the Committee will continue to review the situation, including the implications for the economy of the omicron variant, focusing on the medium-term inflation outlook.

“The Committee continues to judge that there are two-sided risks to the inflation outlook in the medium term, but considers that a modest tightening of monetary policy is likely to be necessary during the forecast period to meet the inflation target. of 2% in a sustainable way, “he added.