LONDON: The Bank of England on Thursday said it had voted to keep its main interest rate at 0.75 percent as it mulls Brexit uncertainty and weak global growth.
The Monetary Policy Committee decided unanimously to hold borrowing costs at a regular meeting held Wednesday, the BoE said in published minutes, reports AFP.“Since the MPC’s previous meeting, the trade war between the United States and China has intensified, and the outlook for global growth has weakened,” the Bank of England said.
It noted also that “shifting expectations about the potential timing and nature of Brexit have continued to generate heightened volatility in UK asset prices, in particular the sterling exchange rate.”
Unlike the European Central Bank and US Federal Reserve which are both cutting rates, the BoE is sitting tight, also as inflation weakens in Britain.
“In the event of a no-deal Brexit, the exchange rate would probably fall, CPI inflation rise and GDP growth slow,” the BoE said Thursday. The pound showed little reaction to the expected UK rate decision, as investors digested news of an unexpected 0.2-percent drop in British retail sales in August. “Given the drop in (British) GDP in the second quarter, the fall in core inflation to an almost three-year low in August and the ongoing Brexit drama, there was never much chance that the MPC would raise interest rates,” noted Thomas Pugh at Capital Economics research group.