Bank of England Leaves Rates Unchanged

Politics Dow Jones Newswires

The Bank of England left its benchmark interest rate unchanged on Monday amid signs the U.K. economy had a slow start to the year.

In its first policy announcement since the U.K. election last week, the BOE said that its rate-setting Monetary Policy Committee kept the central bank's main rate at 0.5% and the size of its bond portfolio at 375 billion pounds ($579 billion).

The decision was as expected. Sterling and government bonds were largely unmoved.

The BOE normally announces its policy decisions on a Thursday but this month's announcement was delayed until Monday because of Thursday's election, which saw Conservative Prime Minister David Cameron returned to power with an outright majority in parliament after five years of coalition.

BOE policy makers were bound since March 30 by British election rules that prevent public officials from speaking in public while the general election campaign is in full swing.

The central bank will on Wednesday publish its latest forecasts for the U.K. economy in its quarterly inflation report. Economic growth was weaker than expected in the first quarter, up just 0.3% from the previous quarter, and annual inflation has slowed to zero following a slump in the oil price. But economists say they expect the central bank will signal Wednesday that it expects both growth and inflation to accelerate in the second half of the year.

Investors expect the BOE to begin slowly raising its benchmark interest rate early next year.

The Federal Reserve is expected to raise short-term rates in the U.S. in September.

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