Last week, The Bank of England’s Monetary Policy Committee (MPC) voted to maintain Bank Rate at 5.25%. The Committee also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion over the next twelve months, to a total of £658 billion.
Richard Fuller MP said:
Keeping interest rates at 5.25% was the right decision by the Bank of England.
Although we can’t be sure that there won’t be any future increases in rates, this decision will encourage greater competition by banks to lower mortgage rates once again.
But also note that the Bank decided that, over the next twelve months, it would sell £100bn of government bond purchases. These purchases were made as part of the quantitative easing strategy started in 2009. Over the years, the Bank bought £895bn of government bonds.
The sale of £100bn in such a short period may test markets and remember, any losses that the Bank makes on these sales will count against public spending. These sums are far from trivial. In April this year, the Bank of England estimated total losses to be covered might amount to £100bn over the next ten years
