The Bank of England is the central bank of United Kingdom and is located in city of London which is the central financial district of UK.  The BoE is one of the oldest banks in the world, so it has been used as a model for central banks around the world. It has broad liabilities like most central banks around the world. The BoE issues currency and most importantly oversees monetary policy. It acts as the government bank and the lender of last resort meaning it provides loans to banks and other institutions that are in financial difficulty.

MAIN OBJECTIVES OF THE BANK

1. Monetary Stability

The first one is to maintain monetary stability. The monetary stability of a country is manifested in stable prices and high level of confidence in the country’s currency. The Bank of England is responsible for setting the UK’s official interest rate, in order to meet the inflation target set yearly by the Chancellor of the Exchequer. The Bank of England Monetary Policy Committee makes the interest rate decisions, and applies them through its financial market operations. The bank strives to achieve high economic growth in a low-inflation environment.

2. Stability

The Bank of England’s second main objective is to improve financial stability in the UK. When there is a threat to the financial stability of the UK financial system, the Bank of England must act to avoid it. The latest example of a threat to the stability of the UK financial system is the Northern Rock Bank Run, in which case the Bank of England had to lend North Rock as a last resort.

BoE MONETARY POLICY COMMITTEE

The MPC sets and announces monetary policy eight times a year – roughly every six weeks – usually always at noon on a Thursday. It’s estimated that the decisions made by the MPC will take two years to fully take effect – which means all announcements have to consider future events as well as historic and current economic circumstances. The BoE releases base rate announcements, quarterly monetary policy reports, which set out their economic analysis and inflation projections. These reports are useful for traders as they explain the decisions behind interest rates in more detail.

HOW TRADERS USES THE MONETARY POLICY DECISION

For example, if the MPC decides to increase interest rates, this could cause the value of the pound to rise and reduce the value of stocks, bonds, indices and other securities. And if they decide to lower interest rates, GBP could fall in value and cause other asset classes to rise.

Most traders will monitor Forex pairs such as EUR/GBP and GBP/USD, UK stock indices including the FTSE 100 and FTSE 250, as well as any UK based banking stocks such as Barclays, Lloyds and HSBC.

CONCLUSION

Following the economic indicators monitored by the MPC and performing thorough fundamental analysis can reveal the potential BoE interest rate hikes and cuts. With professional support from a broker like Winstone Prime, you can take advantage of the opportunities that arise from the Bank of England central bank meetings. Checking the Winstone Prime economic calendar to learn the time and date of the next BoE event. Trade GBP/USD currency pair and British assets and index with great trading conditions and trade both directions of the price with Long and Short positions, and without having to physically purchase them. The Bank of England has its wealth and monetary affairs. Now that you know how the BoE takes care of the economy and how the MPC interest rate decisions affect the value of GBP and other British assets, get yourself prepared with Winstone Prime state of the art trading tools and start trading with confidence!