BoE Elects to Leaves Interest Rates Steady
August 7, 2008
As expected, the Bank of England voted to keep interest rates on hold at 5.00% in August, as the Monetary Policy Committee juggles the trade-off between rising inflation and slowing growth. Mervyn King, BoE Governor, has already warned that record oil prices are likely to drive inflation above 4.00%, but the latest data suggests this spike will come sooner than expected. However, the risks of a sharp slowdown will have dissuaded the MPC from raising rates this month, with the keenly-watched CIPS purchasing managers’ indices suggesting the UK service, manufacturing and construction sectors all contracted in June. Following the announcement the Pound declined upwards of 0.6% against the U.S. dollar.