BANK OF ENGLAND: We're Looking Into Adopting Forward Guidance

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Markets More: Bank of England Mark Carney BANK OF ENGLAND: We're Looking Into Adopting Forward Guidance Sam Ro Jul. 4, 2013, 7:02 AM 144 Tweet!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs");EmailShare on Tumblr

REUTERS/Chris Wattie

Bank of England Governor Mark Carney

See Also The George Clooney Of Central Bankers Just Started An Incredibly Difficult Job: Saving The UK Economy ALBERT EDWARDS: Mark Carney May Become 'One Of The Most Ruinous Central Bankers Ever' ROSENBERG: In 2007, I Had A Conversation With Mark Carney That Sent A Chill Up My Spine The Bank of England is keeping interest rates and its asset purchase plan unchanged as expected.

But in an unusual move, the BoE issued a statement, which it typically does only when it makes a change in policy.

Some are attributing this to new BoE governor Mark Carney, who appears to be pushing for more transparency.

"The latest remit letter to the MPC from the Chancellor had requested that the Committee provide an assessment, alongside its August Inflation Report, of the case for adopting some form of forward guidance, including the possible use of intermediate thresholds," noted the statement.

Forward guidance is one of the tools employed by the U.S. Federal Reserve in its effort to be more transparent.

Here's the full statement:

Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billionThe 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 £375 billion.

Since the May Inflation Report, market interest rates have risen sharply internationally and asset prices have been volatile.  In the United Kingdom, there have been further signs that a recovery is in train, although it remains weak by historical standards and a degree of slack is expected to persist for some time.  Twelve-month CPI inflation rose to 2.7% in May and is set to rise further in the near term.  Further out, inflation should fall back towards the 2% target as external price pressures fade and a revival in productivity growth curbs domestic cost pressures. At its meeting today, the Committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May Report.  The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy. The latest remit letter to the MPC from the Chancellor had requested that the Committee provide an assessment, alongside its August Inflation Report, of the case for adopting some form of forward guidance, including the possible use of intermediate thresholds.  This analysis would have an important bearing on the Committee’s policy discussions in August. In the light of these considerations, the Committee voted to maintain the size of its programme of asset purchases financed by the issuance of central bank reserves at £375 billion.  The Committee also voted to maintain Bank Rate at 0.5%. The minutes of the meeting will be published at 9.30am on Wednesday 17 July. To embed this post, copy the code below and paste into your website or blog.600px wide (preview)400px wide (preview) 300px wide (preview) Alerts Newsletter URL Recommended For You Insane Footage Of A Leopard Attack In The Wild   Insane Footage Of A Leopard Attack In The Wild   More: Bank of England Mark Carney Get Alerts for these topics »

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