a House of Lords report Published last month asked the central bank to clearly explain what it meant by “transient” inflation and to demonstrate that the plan is to keep price gains under control. The report also noted that the bond-buying program had exacerbated wealth inequalities and that the Bank of England had not sufficiently engaged in the debate about the downsides of continued use of asset purchases, which began in 2009. .
And then there is the question of what the central bank will do once it stops buying bonds. Historically, the central bank has said it would raise interest rates to 1.5 percent before beginning asset sales from a bond-buying program, a threshold that has never been reached since. In February, the central bank told its employees Review how to tighten monetary policy, including whether orders to sell assets must be reversed before rates are raised. On Thursday, analysts will seek an update from the review. Markets are already predicting that the central bank will start raising interest rates next year.
The central bank is also expected to update the markets on the preparedness of financial institutions negative interest rates. In February, it gave banks six months to prepare for below-zero rates so that it could change that policy if needed. A negative interest rate would mean charging banks to deposit cash with the central bank, which would also lower other interest rates in the economy, for example, on loans to businesses and homes. In theory this would encourage more lending and investment.
Since asking banks to prepare, the British economy has boomed, albeit an unequal, which has eased the case for negative interest rates. But from now on, the Bank of England will have this policy tool in its pocket.
After the departure of the chief economist of the bank, Andy Haldane, In June, only eight committee members are voting at this meeting.