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2009 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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The Bank of England Monetary Policy Committee consists of nine members. The Committee meets monthly for two days, usually during the first week in the month in order to determine the near-term direction of monetary policy. Changes in monetary policy are announced immediately after the meetings, but no details are available until the minutes are published two weeks later. Why Investors Care
Highlights
As expected, the Bank of England Monetary Policy Committee left their key interest rate unchanged at 4.5 percent for the third month. The MPC had lowered rates by 25 basis points at their August meeting. The MPC is caught between weak growth and an increasing rate of inflation. Inflation has been above the Bank's inflation target of 2 percent for three months. The latest reading - September - was 2.5 percent when compared with last year. But there are some tentative signs that the economy is recovering. Retail sales data were better than expected and the housing market is picking up. Many consumers remain highly indebted, manufacturing is weak, unemployment is rising, and the stimulus from increased government spending on domestic demand is fading. The central bank followed its normal practice of making no statement accompanying the decision to leave rates unchanged. Rather, Bank of England watchers will have to wait until the minutes of the meeting are released on November 23.
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The Bank of England's primary goal is to contain inflation and it uses an inflation target to do so. Beginning with the January 2004 meeting, the Monetary Policy Committee is using the harmonized index of consumer prices for its inflation indicator, which is called the CPI. Its new inflation target is 2 percent. Previously, the MPC used the retail price index excluding mortgage interest payments as its inflation indicator and a 2.5 percent inflation target. There has been a substantial spread between the two measures of inflation which can be traced to the way they are calculated. Among the key differences is the exclusion of council taxes and owner-occupied housing costs from the CPI. Arithmetic means are used to combine individual prices to construct the RPIX while geometric means that allow for substitution are used in calculation of the CPI. This formula differential accounts for nearly half of the difference in the two rates. |
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