The Bank of England on Thursday announced that monetary policy was unchanged, however vowed to monitor rising inflation as the UK economy began to recover from the slump.
The central bank’s Monetary Policy Committee unanimously decided to keep the key lending rate at a low of 0.1%, and the majority voted to keep asset purchases at the current level of £ 895 billion ($ 1.24 trillion).
The central bank noted that global GDP growth was relatively strong compared to what had been expected since the last report in May. This adds to the pressure on global prices.
The Monetary Policy Committee expects that the economy will experience a phase of GDP growth and inflation on the market for a period of time. But after that economic growth and inflation will return.
The Central Bank stressed that there is a risk that there is a possibility that prices will soar larger than expected. Based on the survey conducted, the final result found that inflation expectations in the UK remain appropriate.
On that basis also one of the economists Andy Haldane opposed this decision because for him the bank should reduce bond purchases by £ 50 billion due to inflation concerns.
The GBP plummeted to 1.3908 from 1.3977 at the beginning of the session.
Consumer price inflation in the UK was at 2.1% in May, exceeding forecasts and surpassing the bank’s 2% target for the first time in almost two years, while core inflation rose from 1.3% in April to 2% in May.
