Friday, 11 February 2011

BoE holds rates as UK economy rebounds

The Bank of England left monetary policy unchanged on Thursday.

Considerations for an exit from the current easy monetary policy have been complicated by lingering weakness in the economy. A report from Reuters on Thursday showed that UK factory production fell in December.

Factory output fell unexpectedly in December, but a weather-related surge in energy production offset the decline, and economists said they expected a manufacturing bounce-back in January.

The Office for National Statistics said that manufacturing output dropped by 0.1 percent in December -- its first decline in 8 months -- after a 0.6 percent rise in November. Analysts had forecast an increase of 0.4 percent...

Helped by a surge in electricity and gas output, the wider industrial output measure rose by 0.5 percent as expected. As a result, the ONS said the figures did not point to a revision of the 0.5 percent fall in economic output recorded for the last three months of 2010.

However, another Reuters reports showed that GDP rebounded in January.

The economy rebounded strongly last month after its unexpected weather-related contraction in December, the National Institute of Economic and Social Research estimated on Thursday.

NIESR, an academic forecasting body, calculated that gross domestic product grew by 0.6 percent on the month in January. Private-sector surveys have also pointed to a rapid rebound from the coldest December in 100 years.

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