The Economics and Statistics Division maintains archives of previous publications for accountability purposes, but makes no updates to keep these documents current with the latest data revisions from Statistics Canada. As a result, information in older documents may not be accurate. Please exercise caution when referring to older documents. For the latest information and historical data, please contact the individual listed to the right.
<--- Return to Archive
For additional information relating to this article, please contact:
March 16, 2017MONETARY POLICY: UK The Bank of England's Monetary Policy Committee (MPC) voted to maintain the Bank Rate at 0.25 per cent and continue with UK non-financial corporate bonds purchases of up to £10 billion and to maintain the stock of UK government bond purchases at £435 billion.
The MPC expects a slowdown in aggregate demand dover 2017 with household demand growth declining in response to lower real income growth. Retail sales have weakened while consumer confidence indicators have been steady. Overall the economy is expanding at steady pace in line with historical average rates. Slowing domestic demand may be offset to some degree by more supportive net trade following fall in sterling and more robust global momentum. UK market interest rates have fallen and equity prices of firms with exposure to UK consumers have underperformed.
Finally, the MPC notes that monetary policy cannot prevent the real adjustment that will be necessary following the UK's exit from the EU and the resulting changes in international trade agreements and weaker real income growth over the next few years. The inflationary effects of the weaker value of the sterling could only be fully offset at the cost of higher unemployment and potentially weaker income growth as a result. The MPC must balance the trade-off between the speed with which it returns to its inflation target of 2 per cent and a monetary policy that supports jobs and economic activity. The MPC judged that it remained appropriate to return to target inflation over a somewhat longer period than usual and that the current monetary policy stance remained appropriate to achieve that.
Year-over-year CPI inflation was 1.8 per cent in January and is expected to rise above 2 percent target in coming months. Inflation is expected to peak around 2.75 per cent in early 2018 before gradually moving back down as the effect from the fall in sterling shrinks. Pay growth has remain subdued.
Bank of England
<--- Return to Archive
