Wednesday, December 20, 2006

Forex News: 20.12.2006 BoE expects inflation pressure weakening

The Bank of England published today the minutes of the Monetary Policy Committee meeting held on 6 and 7 December 2006, when all members of the Committee unanimously voted to keep the Bank Rate at its current level 5.0%.

All members of the Committee agreed that from the moment of the publication of November Inflation Report, inflation expectations did not change. In addition, it is still early to judge the effects of the latest rate increase by 0.25% to 5.0% at the meeting on November 8.

CPI inflation fastened as it was largely expected, though some members of the Committee were looking for slight weakening of inflation pressures. In 2007, inflation pressure is to weaken reflecting reduced energy prices.

The Monetary Policy Committee noted in its report that the labor market is stable, while new job vacancies are to grow. Business surveys also indicated that in the forth quarter manufacturing sector was weakening, while services sector was strengthening.


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