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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 fourth month. The MPC had lowered rates by 25 basis points at their August meeting. Inflation has been above the Bank's inflation target of 2 percent since July. The latest reading - October - was 2.3 percent when compared with last year. In the past month, the economic data has been inconclusive. Inflation began to fall, there was slightly weaker data from some surveys of business confidence and manufacturing output was weak. By contrast, stronger indicators came from the housing market with continued price stability alongside an increase in the number of transactions. 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 December 21.
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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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