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BOE minutes: No vote on new guidance, UK unemployment rises to 7.2%

February 19, 2014

BOE minutes for February's meeting showed that policymakers were unanimous to holding interest rate and amount of asset purchases. The BOE want to ensure investors that interest rates would remain at the current low level of 0.5 percent despite the recent progress in economic data. "There was a scope to absorb spare capacity further," before hiking interest rate, the minutes added. Policymakers revealed that there was no vote on the new change in forward guidance which BOE governor introduced this month. Carney mentioned last week that the slack in the economy is nearly 1 percent to 1.5 percent of gross domestic product. A report released today showed that U.K. ILO unemployment for the three months through December unexpectedly rose to 7.2 percent, marking its first surge since February last year, from both prior and predicted readings of 7.1 percent. The number of job seekers retreated by 125,000 to 2.34 million in the final three months of 2013, while the number of workers edged up 193,000 to 30.1 million. With unemployment remaining above the bank's threshold of 7 percent that meant guidance in place and "no number member thought it appropriate to tighten, or to loose, the stance of monetary policy," BOE minutes said. Despite the rise in jobless rate, the reaction was of the pound was weak as the BOE mentioned last week that raising interest rate will not only depend on unemployment rate but also on other measures such as business surveys and the number of hours worked. In January, jobless claims dipped 27,600 from a revised of 27,700 drop in December and median forecast of 20,000 fall. As of 09:54 GMT, the pound fluctuated to hover around 1.6685 after hitting a high of 1.6732 and a low of 1.6660.   Investors will probably give more relevance to other economic gauges rather than inflation and jobless reports only. Retail sales due later this week may show a slide of 3.1 percent last month after falling a revised 1.0 percent in the last month of 2013.

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Source: Financial Markets

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