RTTNews - Thursday, the Bank of England is expected to leave the key interest rate unchanged at a record low and to raise the size of asset purchase scheme.
At the end of the two-day rate setting meeting, the Monetary Policy Committee of the central bank is set to retain the Bank Rate at 0.5%, which is the lowest since the the bank was established in 1694.
In June, all nine members of the MPC had unanimously decided to hold the key interest rate at 0.5% and to continue with quantitative easing measures totaling GBP 125 billion using central bank reserves.
The central bank is now expected to increase the size of the scheme by another GBP 25 billion to a total GBP 150 billion.
The British Chambers of Commerce said the central bank would possibly hold the key rate today and widen the quantitative easing and its scale.
According to David Kern, Chief Economist at BCC said QE is not achieving its aims and more forceful measures are required to nurture confidence. The business lobby urged the chancellor to increase the ceiling by a further GBP 50 billion to GBP 200 billion.
The revised quarterly national account report released after June's BoE decision downwardly revised the GDP for the first quarter. Accordingly, the economy shrank 2.4% sequentially in the first quarter, the largest contraction since 1958. Annually, first quarter GDP declined 4.9%, revised down from a 4.1% drop published last month. This was the biggest drop on record.
Consumer price annual inflation in May had eased slightly to 2.2%, the lowest since January 2008, but stood above the central bank's target for the 20th consecutive month. The central bank expects inflation to stay below target in the coming few years.
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