Sterling has declined by 1% against the Euro and is tumbling against the US Dollar after the Bank of England made dovish comments and maintained interest rates at the record low level of 0.5%.
Thursday’s policy meeting was new Bank governor Mark Carney’s inaugural decision in the top job. As a possible sign of Carney’s new style of leadership the Bank made an unprecedented move by publishing a statement explaining the broad reasons behind the Bank’s decision to maintain total asset purchases at £375 billion.
“At its meeting today, the Committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May Report,” it said, adding that it still expected inflation to rise further in the near term before falling back to the target 2% level.
“The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”
Howard Archer of IHS Global Insight says today’s Bank of England statement shows its monetary policy committee is moving towards a policy of providing more communications about its decisions:
“With gilt yields having recently been sent significantly higher amid increased global financial market turmoil, the MPC likely felt it was a good move to make it clear at an early stage that any tightening in UK monetary policy is a considerable was off.”
Elsewhere the European Central Bank maintained its key interest rate at 0.5%. At the press conference following the release ECB President Mario Draghi said that he expects interest rates will remain low for an ‘extended period of time’ as he tries to restrain market borrowing costs in order to help the Eurozone economy.
“The Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time,” Draghi said at a press conference in Frankfurt. “The risks for the Euro area continue to be on the downside. Our monetary policy stance will remain accommodative for as long as necessary.”
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2909
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8559
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4114
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6539
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7694
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1734
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7012
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.5994
(Correct as of 14:15 am GMT)