Bank of England leaves rates unchanged at 0.5% — but signals a hike in May

pulse

March 22, 2018 1:16 PM

The bank's Monetary Policy Committee backed leaving unchanged policy, but set the path for a rate hike in May.

Bank of England left monetary policy unchanged in March, as expected
.
That means a base interest rate of 0.5%.
The central bank, however, made clear it is ready to raise interest rates at its next meeting in May.

LONDON — The Bank of England left monetary policy unchanged on Thursday, but made clear it is ready to raise interest rates at its next meeting in May.

The Monetary Policy Committee voted to leave rates on hold, but the minutes of its meeting made clear that a second hike in six months is likely on its way. Seven members of the committee voted to leave rates unchanged, while Ian McCafferty and Michael Saunders, widely known as the bank's most hawkish policymakers, backed a hike.

The bank increased its base interest rate from 0.25% to 0.5% in November last year, having previously failed to raise rates in more than a decade as a response to the financial crisis.

The bank's announcement was largely in line with market forecasts, although most BoE watchers expected a unanimous decision from the MPC to leave policy alone.

After hiking rates for the first time since the financial crisis last November,

The pound briefly spiked higher against the dollar after the announcement, but has calmed down around five minutes afterwards, trading up by around 0.3%, as the chart below shows:

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