Pound falls after BoE kept rate unchanged

The British pound fell slightly below 1.6150 USD after it had approached the 1.62 USD level before the Bank of England (BoE) announced its monetary policy decision. BoE decided to keep the bank rate, paid on commercial bank reserves, at a record low of 0.5%, unchanged since March 2009. Also, the central bank made no changes to its 200 billion pound programme of asset purchases. The minutes of this meeting will be published on March 23 and the markets will closely watch to see who were the supporters of a rate hike and to find possible signals on when the bank rate will be increased. Thursday's decision was in line with market's expectations, but analysts are forecasting a rate hike until May, as mounting prices put pressure on inflation. Inflation rate jumped 4% in January from 3.7% the previous month. BoE monetary policy committee members Andrew Sentence, Spencer Dale and Martin Weale voted for a rate hike at the central bank meeting in February as inflation rate continued its rise, but analysts say the rest of the members might still be worried about the uncertainity of the economic recovery. Meanwhile, the Office for National Statistics published encouraging economic figures earlier on Thrusday. Industrial production rose 0.5% in January, while manufacturing output saw a 1% rise, both above market's expectations.

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