BOE leave UK interest rates unchanged

At its latest policy meeting, the Bank of England decided to maintain current policy settings leaving UK interest rates unchanged at 0.5% and the size of its Quantitative Easing (QE) program also unchanged at a total of £375 billion.

Recent economic data has revealed that UK gross domestic product (GDP) climbed 0.3% in the first quarter of 2013 while data from the manufacturing sector showed some stability. Construction levels were the highest they had been in the last 6 months and UK house prices have showed a significant gain according to recent data.

On 1 July, Mark Carney, currently the Governor of the Canadian Central Bank will take over from Sir Mervyn King as Governor of the Bank of England for a five-year term. Just days later comes that month’s policy meeting and all eyes will be on any change in direction from the top economic policy making body in the UK.

Carney has recently been quoted as saying that the UK is a "crisis economy".

The Office for National Statistics (ONS) reported yesterday that UK industrial production output rose by 0.7% month-on-month in March, a much higher figure than had been expected.

In the US, better than expected jobless data out yesterday gave a further boost to risk sentiment in the markets. Initial weekly unemployment claims fell by 4,000 last week to reach a total of 323,000 versus the expected total of 335,000.

In Europe, the Spanish Treasury raised a total of €4.57 billion yesterday in its first auction since last week’s cut in euro zone interest rates by the European Central Bank (ECB). Bonds from distressed European countries have rallied since the ECB cut its key interest rate last week.

On a more negative note, data out of Spain earlier in the day showed that Spanish industrial output continued to fall in March, albeit at a more moderate pace of 0.6% year-on-year, the smallest decline since August 2011, far better number than the 6.5% work-day adjusted drop economists had pencilled in.