2008 U.S. Economic Events & Analysis
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BOE Announcement
Definition
The Bank of England Monetary Policy Committee consists of nine members. The Committee meets monthly for two days, usually during the first week in the month in order to determine the near-term direction of monetary policy. Changes in monetary policy are announced immediately after the meetings, but no details are available until the minutes are published two weeks later. Why Investors Care

Released on 3/6/08
Change
 Actual 0bp  
 Previous -25 bp  
   
Level
  Actual 5.25%  

Highlights
The Bank of England kept its key interest rate at 5.25 percent this morning. The Bank previously had lowered its interest rate in both February 2008 and December 2007. The Bank still has the highest interest rate among G7 countries. Although initial fourth quarter growth estimates were still on the robust side, recent monthly data have indicated that the economy may be slowing faster than anticipated as a combination of past rate increases take hold and the global credit crunch shows signs of impacting key sectors of the economy such as housing. The CPI has been above the Bank's inflation target of 2 percent. It was noted by some analysts that the BoE had never cut rates in the month of March since it became independent about 10 years ago. Six of the nine MPC members had spoken in public recently and all cited the upside of inflation risks. The monetary policy committee did not issue a statement at the conclusion of the meeting. Rather analysts will have to wait two weeks until March 19 when the minutes will be released.

Trends
[Chart] The Bank of England's primary goal is to contain inflation and it uses an inflation target to do so. The Monetary Policy Committee has been using the harmonized index of consumer prices for its inflation indicator - the CPI - since January 2004. The Bank's inflation target has been 2 percent since that time. Previously, the MPC used the retail price index excluding mortgage interest payments as its inflation indicator and a 2.5 percent inflation target. There has been a substantial spread between the two measures of inflation which can be traced to the way they are calculated. Among the key differences is the exclusion of council taxes and owner-occupied housing costs from the CPI. Arithmetic means are used to combine individual prices to construct the RPIX while geometric means that allow for substitution are used in calculation of the CPI. This formula differential accounts for nearly half of the difference in the two rates.
Data Source: Haver Analytics | Consensus Data Source: Market News International and Thomson Financial

2008 Release Schedule
Released On: 1/10 2/7 3/6 4/10 5/8 6/5 7/10 8/7 9/4 10/8 11/6 12/4


 
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