No great surprise that the Bank of England has decided to keep monetary policy on ice for yet another month. With new BOE head Carney due on board in July, the BOE will keep policy ticking over in neutral to wait and see what new policy initiatives Carney might need to pull out from his war chest to help turbo-charge recovery in future.
The recent positive news on the UK economy should also convince the Bank to keep its powder dry for the moment. Embryonic recovery seems to be emerging from consumers and from industry at the moment. The economy seems to be steering away from recession and the key decision awaiting Carney will be whether he needs to lean with the wind to help the recovery on its way up. The outlook still contains elements of uncertainty, not least the headwinds blowing from the Eurozone debt crisis and the drag effects of the government’s austerity measures. It is up to the BOE to lay more groundwork for sustainable recovery ahead. More monetary easing should not be ruled out at this stage. This will have to take the shape of further quantitative easing as the Bank have reached rock bottom on further rate cuts.
No comments:
Post a Comment