Bank of England vote unanimously to hold Bank Rate
The Bank of England’s Monetary Policy Committee have voted unanimously to maintain Bank Rate at 0.75%.
The Committee concluded that the “effect of Brexit uncertainty has intensified” and expects greater clarity to emerge over the coming months, boosting investment growth.
The MPC’s projections were finalised before the Budget measures were announced, and most expected the MPC to hold until after the Budget announcements had been analysed.
The MPC’s minutes noted that “the economic outlook will depend significantly on the nature of EU withdrawal, in particular the form of new trading arrangements, the smoothness of the transition to them and the responses of households, businesses and financial markets”.
It concluded that the path of monerary policy wil depend on the effect of the Brexit negotiations, stating that it will “not be automatic and could be in either direction”.
Frances Haque, Santander UK’s chief economist, commented: “The decision to hold rates was widely expected by both the market and commentators, despite the more positive outlook for Q3 economic growth.
“Although inflation remains above the 2% level and wage growth has tipped 3%, the MPC looks to have remained cautious in its approach, wanting to wait until the outcome on Brexit is known before raising rates further.
“Assuming a Brexit deal can be reached, the MPC will now likely wait until after March 2019 before hiking rates again.”
Alistair Wilson, Zurich’s head of retail platform strategy, added: “It would have been a surprise for the Bank of England to raise rates so soon after the Chancellor’s spending spree on Monday.
“Inflation also fell lower than expected at the last count, and wages have risen at the fastest pace in nearly a decade, easing pressure to raise rates in the immediate future.”
Source: Financial Reporter