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Carney Unlikely To Trigger Policy Action At His First BoE Meeting

Carney Unlikely To Trigger Policy Action At His First BoE Meeting

Bank of England's New Governor Mark Carney is unlikely to initiate any immediate policy change at his first monetary policy committee meeting that started Wednesday.

Expectations are high on his arrival, with markets keenly waiting for better communication and interest rate guidance. The former Bank of Canada Chief is likely to call for more aggressive measures to achieve "escape velocity" in Britain's recovery.

On conclusion of the meeting on Thursday, the MPC is set to keep the size of stimulus unchanged at GBP 375 billion and also the record low 0.50 percent. More actions are expected at the August meeting.

The announcement is due at 7.00 am ET.

Only the minutes of the meeting to be published on July 17 will give an idea about how members voted at the meeting.

Former Governor Mervyn King had seen his demand for additional QE being outvoted continuously by a majority of six members in the final months of his tenure. King was at the helm of the central bank for a decade.

The scope for additional dosage of quantitative easing has increased with revised GDP data showing the peak-to-trough fall of the economic downturn in 2008/09 was 7.2 percent compared with a previous estimate of 6.3 percent.

A desire to counter rising bond yields and to make recovery firm, Carney will encourage more QE, IHS Global Insight's Chief U.K. economist Howard Archer said.

Signaling that the economic recovery seen at the start of the year is gaining momentum, the latest Purchasing Managers' survey showed that the dominant service sector and manufacturing logged its strongest growth in more than two years in June.

At the same time, the construction sector expanded for the second straight month in June helped by strong residential building activity.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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