Bank of England holds rate awaiting Brexit deal
The Bank of England has voted to keep its main lending rate at 0.75 percent faced with “intensified Brexit uncertainties”, minutes of its latest regular monetary policy meeting revealed Thursday.
As widely expected, the BoE’s Monetary Policy Committee decided against lifting borrowing costs, also as tumbling oil prices help to push down inflation.
“Brexit uncertainties have intensified considerably since the committee’s last meeting” on November 1, the minutes said.
Since that meeting seven weeks ago, the BoE has warned that a no-deal Brexit could trigger a financial crisis in Britain, while the pound could plunge by as much as 25 percent.
Meanwhile minutes of the latest meeting that concluded Wednesday said that “the further intensification of Brexit uncertainties, coupled with the slowing global economy, has… weighed on the near-term outlook for UK growth”.
They added: “Business investment has fallen for each of the past three quarters and is likely to remain weak in the near term.
“The housing market has remained subdued. Indicators of household consumption have generally been more resilient, although retail spending may be slowing.”
British retail sales did rebound strongly in November, however, as shoppers bagged Black Friday bargains, official data showed on Thursday.
Total sales jumped 1.4 percent compared to October, the Office for National Statistics calculated, with non-food items helped by heavy price discounts.
That beat analysts’ consensus forecast for a modest 0.3-percent increase.
Meanwhile with less than 100 days until Britain is set to officially depart the European Union, British MPs head off for Christmas, leaving a country in limbo with no divorce deal in place and total confusion over what happens next.
“The broader economic outlook will continue to depend significantly on the nature of EU withdrawal, in particular: the form of new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond,” the latest BoE minutes said.
“The appropriate path of monetary policy will depend on the balance of the effects on demand, supply and the exchange rate.
“The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction,” the minutes added.
At its latest meeting, BoE policymakers voted also to maintain the central bank’s quantitative easing stimulus policy, under which it has pumped £445 billion ($564 billion, 492 billion euros) around the UK economy.
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