BoE On Hold as Manufacturing Perks Up

The Bank of England left monetary policy unchanged at its May meeting, as expected, Bank rate remaining at 0.5% and the size of the asset purchase programme at £375 billion. No statement was issued, though the Bank will publish its quarterly inflation report on Wednesday May 15.

Assuming Sir Mervyn King continued to vote for more quantitative easing, he appears to have been outvoted again, which may also be the case next month, his final monetary policy committee meeting as governor.

The majority on the committee looks to have been persuaded to stay its hand by two factors. Members are waiting on the success of the Funding for Lending scheme, and recent economic data has been stronger than expected, including the 0.3% rise in first quarter gross domestic product.

Industrial production figures today showed a 0.7% rise in overall industrial production in March, and a welcome 1.1% bounce in manufacturing. The 0.2% first quarter rise in industrial production was consistent with the GDP figure. More here.

This piece is cross-posted from David Smith’s Economics UK with permission.