The Bank of England released the minutes of the Monetary Policy Committee meeting for the 9th April this morning. The MPC voted unanimously (9-0) to leave interest rates at the record low level of 0.50% and the level of asset purchases unchanged at £375bn.
Following the release in the FX markets sterling has been choppy as some would have hoped that a member of the MPC might have voted for a raise in rates. Cable is trading at a 5 year high with traders betting on the economic growth and the likely raise of interest rates. This has been compounded by the UK ILO unemployment dropping below the 7% threshold to 6.9% at the latest release.
Of interest, BoE did not mention Sterling strength.
There has been considerable speculation in the media that the growth in house prices, is a new asset bubble that could unsettle the economic recovery. The minutes stated that “House prices show considerable momentum, especially in London,” analysts believe that the growth in prices could be cooled by raising interest rates. Critics state that the London housing bubble is fuelled by the lack of new supply and the overwhelming demand rather than the record low borrowing rates.