Forex Blog: Currency Trading News & Analysis.

March 10th 2005

UK Central Bank holds rates constant

The UK Central Bank voted today to keep interest rates constant at 4.75%.  The Bank’s decision not to raise rates was based on the economy’s recent stagnation, and general sentiments that inflation was where it should be. Most economists agree there is still downside risk in Britain’s economy, as the housing market and the manufacturing sector are still weak. Investors anxiously await the publishing of the Bank’s minutes, to see if there were any dissenting votes, as was the case at last month’s meeting. Such dissension, combined with a release of new macroeconomic projections, might lead to a rate hike in the coming months. But, as BNP Paribas reports, such is unlikely:

Nevertheless, the MPC is likely to keep rates on hold in the coming months as more evidence of sub-trend growth is likely to appear. A possible rate cut will crucially depend on the next Chancellor’s fiscal policy. A tighter fiscal stance could pave the way for more monetary relaxation, but such a change can for the moment be ruled out.

Read More: United Kingdom: Bank of England keeps repo rate unchanged at 4.75%

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Posted by Adam Kritzer | in Central Banks, Major Currencies | No Comments »

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