Breaking: BOE keeps the key rate on hold, GBP/USD bounces

FXStreet Team FXStreet

At its scheduled May monetary policy meeting, the Bank of England (BOE) Monetary Policy Committee (MPC) decided to leave the interest rate unchanged at 0.10% while maintaining the QE program at GBP645 billion.

The unexpected element came from the BOE policymakers Haskel and Saunders, the two dissenters on QE, as they said: “There would be greater economic scarring without more stimulus at this stage."

On the policy announcement, GBP/USD bounces-off 2-week lows and regains 1.2350.

The UK central bank, at its emergency meeting on March 19, voted to cut the Bank rate to 0.10% and increase its holdings of UK government and corporate bonds by GBP200 billion, bringing up the total level of QE to £645 billion.

The follow-on meeting on March 26, the BOE maintained the status-quo but left doors open for the expansion to its asset purchase program. It also highlighted concerns about a rapid rise in unemployment and a sharp contraction in the GDP.

The Office for Budget Responsibility (OBR) published a worst-case scenario pointing to a drop of 35% in Q2 GDP.

Please watch over special live coverage on the BOE decision here

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FXStreet

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