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Bank of England

Markets

Bank of England Governor claims low oil prices good for the economy

The Governor of the Bank of England insisted that low oil prices were good for the economy - at least in the “medium term”. Giving evidence to the Commons Treasury Committee today, Mark Carney said it was “absolutely not true" that the Bank wanted to encourage higher oil prices, adding that low oil was “good for growth in the medium term" and a “net positive for the global economy".

Markets

BOE keeps rate at 0.5% as oil and wages weigh on inflation

Bank of England officials said low oil prices and subdued wage growth will keep a lid on inflation as they left their key interest rate at a record low. In the minutes of its December meeting, the Monetary Policy Committee weighed “robust growth” in spending against weak overseas demand and expressed concern over the feeble impetus for prices. It said eight of the nine-member panel voted to leave the benchmark rate at 0.5 percent this month, with Ian McCafferty maintaining his call for a 25 basis-point increase. “There would need to be a sustained firming in domestic cost pressures, compared with current rates,” to push inflation back to the 2 percent target, officials said. “The price of oil had fallen markedly again, increasing the likelihood that headline inflation rates would remain subdued, and nominal-wage growth had leveled off.”

Other News

Inflation slips below zero as petrol prices fall

Inflation slipped back to zero last month as petrol price falls and muted rises for new fashion ranges kept a lid on the cost of living. The Consumer Price Index (CPI) rate of inflation fell from 0.1% in July. CPI has hovered around zero since February. It means the Bank of England continues to face little pressure to raise interest rates, though some officials think underlying inflationary pressure is building as the economy recovers. Inflation was pulled lower as the price of a litre of diesel fell by 6.2p and petrol by 2.4p, both more sharply than in the same period last year, according to the Office for National Statistics (ONS).

Markets

Oil price drop ‘positive’ for the UK

Bank of England governor Mark Carney said the fall in the oil price was a “net positive development” for the UK. Presenting the Bank’s financial stability report in London, he said: “We should be clear that the 40%-plus drop will flow quickly through to consumers and increase real disposable income and is a net positive for the UK economy.” But Mr Carney warned that the fall in the oil price also presented some risks to financial stability.