BOE Seen Keeping QE on Hold at Carney’s First Policy MeetingScott Hamilton
The Bank of England will keep its target for asset purchases unchanged next week as Governor Mark Carney chairs his first policy meeting amid data pointing to an improving recovery, a survey showed.
The nine-member Monetary Policy Committee will hold quantitative easing at 375 billion pounds ($570 billion), according to all 44 economists in a Bloomberg News survey. The decision will be announced at noon on July 4, Carney’s fourth day as governor after taking over from Mervyn King.
While the economy is showing signs of strength after resuming growth in the first quarter, data this week showed Britain suffered a deeper slump after the financial crisis than previously estimated. Carney has said central banks should help deliver “escape velocity” for their economies, fanning speculation he will be more aggressive on stimulus.
“It seems unlikely that Dr. Carney will lead a major easing offensive just four days into the job,” said Philip Shaw, an economist at Investec Securities in London. “So for now we feel that Mark Carney will bide his time. But we find it difficult to see him sitting still for long.”
The Office for National Statistics said on June 27 the economy shrank 7.2 percent from its peak in 2008 to the depths of the recession. That leaves gross domestic product 3.9 percent below the peak, compared with the 2.6 percent previously estimated.
Alongside the decision on asset purchases, the MPC will also keep its benchmark interest rate at a record-low 0.5 percent, another Bloomberg poll shows.
While economists don’t see any monetary-policy changes, Goldman Sachs Group Inc. said there is a 60 percent chance that the MPC will release a statement after the meeting.
“If one of Mr. Carney’s goals as governor is to introduce greater transparency and guidance in BOE policy making, then an ‘easy win’ in this regard would be to introduce a monthly statement following the completion of MPC meetings,” Goldman economist Kevin Daly said on June 25. “Such a statement following the July meeting could minimize any disappointment at the lack of other actions being taken at the meeting.”
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