Bank of England Waits for Draghi
The Bank of England this morning announced that it would leave its policy lending rate unchanged at 0.5%, the same level it has been on since March of 2009. The bank also left its bond-buying program unchanged at $596.5 billion. According to the press release:
The Committee expects the announced programme of asset purchases to take another two months to complete. The scale of the programme will be kept under review.
The Bank of England's lack of action is due to an expectation that the European Central Bank president Mario Draghi will announce later today a bond-buying program for the eurozone. The ECB is not expected to change its interest rate from the current 0.75% nor to fiddle with the overnight rate of zero.
What the ECB is expected to do is announce a sovereign bond purchase plan and sterilize its purchases through the bank's market operations. Sterilization prevents a rise in the money supply by requiring banks to deposit cash with the central bank.
The ECB announcement is due later this morning.
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