- Reuters/Peter Nicholls
- Bank of England ends the year by leaving leaving interest rates unchanged, as had been widely expected.
- The central bank’s nine-member Monetary Policy Committee voted unanimously to leave rates on hold at 0.75%.
- Rates are widely expected to increase further in the coming years, but the timing of any rate hikes remains unclear, with Brexit muddying the waters.
- Bank of England says Brexit uncertainties have “intensified considerably” in minutes of MPC meeting.
The Bank of England on Thursday left interest rates unchanged, as had been widely expected, but warned that uncertainties around Brexit have “intensified considerably” since its last meeting.
Meeting less than 24 hours after the US Federal Reserve raised rates for the fourth time in 2018, the central bank’s nine-member Monetary Policy Committee voted unanimously to leave rates on hold at 0.75%.
Any outcome other than no change from the meeting would have been a significant surprise to markets.
“Brexit uncertainties have intensified considerably since the committee’s last meeting,” minutes from the MPC’s meeting said.
“The further intensification of Brexit uncertainties, coupled with the slowing global economy, has also weighed on the near-term outlook for UK growth.”
Rates are widely expected to increase further in the coming years, but the timing of any rate hikes remains unclear particularly with the looming spectre of a possible no deal Brexit hanging over the UK.
“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 Bank of England added, emphasising its willingness to move interest rates either higher or lower in response to any economic shock from Brexit.
The bank previously warned in November that the worst case no deal Brexit could plunge the UK into its worst recession since the Second World War, and knock 8% off GDP in a single year.