Monday, May 10, 2010

BOE Interest Rate Decision-05.10.2010

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

Nothing surprising here. I expect the BOE will behave itself until the Liberal Democrats/Tories can reach a power-sharing coalition. Though, I am surprised to see the committee continue the £200 billion asset purchasing program, considering the FED ended a similar but much larger program at the end of March. I will have to synthesize the minutes before I make a judgement on this data.

However, I maintain bearish sentiment on the U.K. economy. Britain must work out the above stated political uncertainty soon in order to deal with their gluttonous budget deficit which stands at -12.8% of GDP . Additionally, Inflation remains high at 3.4%. Someone will be held accountable for these numbers when the dust from the PM election settles.

Be sure to check out Alex's post on the election results below. Here


Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

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