United Kingdom exchange traded fund investors can breathe a little easier after Bank of England reassured markets that it will push back plans to raise rates and help support a growing economy.
The iShares MSCI United Kingdom ETF (NYSEArca: EWU) was up 0.3% Thursday. EWU has gained 4.7% over the past week but is still down 1.1% year-to-date.
The market expected the BOE to hike rates from its current record low of 0.5% once unemployment dipped below 7% – the jobless rate now stands at 7.1%. However, the BOE has amended its stance, pointing to rate hikes once pay growth and labor productivity increase, reports Shan Li for the Los Angeles Times.
“The message to businesses, to households is that the Bank rate is going to follow a path that is consistent with jobs, with incomes and with spending growing in a sustainable way,” Bank of England Governor Mark Carney said at a news conference Wednesday, Reuters reports. “We are going to calibrate it carefully. We are not going to take risks with this recovery.”
Consequently, Britain’s central bank will be maintaining its record low benchmark rates.
“Bank rates may need to stay at low levels for some time to come,” Carney said.