Having started the day down, sterling bounced back this morning against most major currencies following the publication of the minutes from the Bank of England’s MPC meeting on the 4th of August. The minutes revealed an 8-1 vote in favour of keeping the interest rate unchanged at 1.0%, but also showed a unanimous vote to maintain the QE budget.
The pound had fallen to a three week low against the dollar amid speculation that the minutes could show a member of the MPC voting for an increase in the Bank’s quantitative easing programme. However, true to form Andrew Sentence called for a 25 basis point rise in interest rates for the third month running. Leaving the majority of the committee in agreement to keep the interest rate at 0.5% and maintain the bank’s £200billion asset purchase scheme.
A rise in the interest rate is not expected until Q2 2011, when a 50 basis points rise is currently forecast.
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