Bank of England leaves interest rates unchanged amid Brexit chaos
The UK central bank’s monetary committee has opted to leave interest rates unchanged at 0.75% amid Brexit uncertainty.
The Bank of England’s (BoE) monetary policy committee (MPC) has decided to leave interest rates on hold amid ongoing Brexit uncertainty and the increased threat of the UK bailing out of the EU without a deal.
All nine members of the bank’s MPC voted to keep borrowing rates unchanged at 0.75%, a level where they have remained since August 2017.
Interest rates highly dependent on ‘nature and time’ of Brexit
The BoE noted that any change in interest rates depends ‘significantly on the nature and timing of EU withdrawal’, according to the minutes from the MPC meeting.
Another major consideration for the UK central bank in setting interest rates is maintaining inflation within 1% range, above or below its target of 2%.
‘The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate,’ the MPC said.
‘The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.’
Brexit continues to leave BoE’s hands tied on interest rates
Tej Parikh, senior economist at the Institute of Directors, said that the BoE is ‘paralysed’ by the ongoing political and economic uncertainty posed by Brexit.
‘Facing a Schrödinger’s Brexit in just over a week, the Bank of England continues to have its hands tied on interest rates,’ he said. ‘It’s virtually impossible for the Bank to make clear decisions right now while the various unknowns surrounding the future path for the economy linger.
‘All eyes will now be on any potential further communications from the Bank on how it might support liquidity and confidence in the event of a possible no deal,’ he added.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Trading around Brexit
Find out how the UK’s exit from the EU continues to affect traders, and discover:
- The unique opportunities in a ‘hard’ and ‘soft’ Brexit
- The markets you should be watching
- Everything that’s happened so far
Live prices on most popular markets