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Resource Center » U.S. & International Recaps | Release Dates | Why Investors Care | Today's Calendar
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BOE Announcement
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Definition
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
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| Released on
4/5/07
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Change
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Highlights
The Bank of England left its key interest rate at 5.25 percent. Analysts had been split as to whether the Bank would increase rates this month or wait until next month when the next Inflation Report will be released. The Bank's monetary policy committee surprised the markets when it unexpectedly increased rates in November 2006 and January 2007. However, in data released this week, manufacturing output declined for the second month in a row and industrial production was also below analysts' forecasts. But inflation remains above the Bank's 2 percent target at 2.8 percent. The 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 April 18.
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Trends
![[Chart]](chart.gif)
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The Bank of England's primary goal is to contain inflation and it uses an inflation target to do so. The Monetary Policy Committee has been using the harmonized index of consumer prices for its inflation indicator - the CPI - since January 2004. The Bank's inflation target has been 2 percent since that time. 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. |
Data Source: Haver Analytics
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