GBP - CENTRAL BANK ANALYSIS

Objective: Through the Bank of England Act 1998, the responsibility for formulating monetary policy, including the objective of stable prices defined by the government's inflation target of 2.0%, was delegated to the BoE's Monetary Policy Committee (MPC).

As of February's report, inflation in the UK stands at 0.4% Y/Y, compared to January's 0.7% Y/Y. Core CPI for the month stands at 0.9%, compared to a prior of 1.4%.

Situation: The BoE kept its Official Bank Rate unchanged at their March meeting at 0.10% with a vote split of 0-0-9. The MPC also voted unanimously to keep its Asset Purchase Facility unchanged for a total of £895 billion.

At the meeting, the BoE stated that it does not intend to tighten policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving its 2% inflation target sustainably.

The BoE concluded that its current stance remains appropriate and news of recent plans for lifting [coronavirus] restrictions may be consistent with a slightly stronger outlook for consumption growth.