World Economy

BoK Keeps Rate on Hold

BoK Keeps Rate on HoldBoK Keeps Rate on Hold

In its monetary policy meeting, the Bank of England kept its record low interest rate and quantitative easing program unchanged.

Continuing to vote eight to one in favor of retaining rates at their historic low of 0.5%, the central bank indicated that the domestic outlook had weakened compared with its last full assessment in November, Yahoo reported.

The eight members who voted for the status quo continued to judge that leaving the stance of monetary policy unchanged would best balance the risks around achieving the bank’s objective of returning inflation to the target in around two years’ time.

Ian McCafferty, the sole dissenter, was of the view that the risks to domestic cost growth remained to the upside and, given the recent depreciation of sterling, were less likely to be offset by the drag from earlier sterling appreciation.

 Production Declines

UK manufacturing and industrial production both experienced a sharp decline in November, to the surprise of many economists, and underlining the struggles the sectors are facing amid a strong pound and plummeting oil prices.

Industrial output slid 0.7% month-on-month after staying flat in October as warm weather cut into energy demand. It was forecast to grow 0.1% in November. The monthly decline was the most in almost three years. Likewise, manufacturing production dropped 0.4% from the previous month, well below forecasts of a 0.1% expansion. Year-on-year manufacturing production contracted by 1.2%, its fifth consecutive month of decline and worse than forecasts of a more moderate 0.8% drop.

On the other hand, industrial production advanced by 0.9% on a yearly basis. This was slower than the 1.7% increase posted in October and economists’ forecast for a 1.7% growth.

Finally, the US economy gained almost 300,000 new jobs in December, capping off the fifth straight year in which employment grew by at least two million. The world’s largest economy created 292,000 non-farm jobs in the final month of 2015, according to a report issued by the Labor Department. Economists had predicted non-farm employment to increase by 200,000 jobs.

The report added that employment in October and November rose by an upwardly revised 307,000 jobs and 252,000 jobs respectively, adding up to a combined upward revision of 50,000 jobs.