Bank of England holds rates at 0.75 percent

Daniel Fowler
November 7, 2019

But the Bank predicted the impact of Brexit and a slowing global outlook means the United Kingdom economy is set to grow by one per cent less over the next three years compared to forecasts made in August.

The Bank of England has left its main interest rate at 0.75 percent, it said Thursday after a regular meeting and before next month's United Kingdom general election to unlock Brexit.

The BoE said that its nine-member Monetary Policy Committee voted 7-2 to keep its key rate at 0.75%, in sharp contrast to forecasts in a Reuters poll for a unanimous decision.

The Bank of England's rate-setting monetary policy committee voted to keep United Kingdom interest rates unchanged Thursday but two members dissented, calling for a cut. Mike Carney, governor of the bank, led the majority in voting to hold the line on the rate.

However, its latest dovish forecasts said rate-setters "may need to reinforce the recovery" - a huge hint of further stimulus - if global growth fails to recover and Brexit uncertainties "remain entrenched", threatening a fresh potential blow for. "We also expect global growth to recover gradually".

Mr Carney said uncertainty over the UK's departure from the European Union could soon come to an end after the Prime Minister struck a new agreement with Brussels.

The main opposition Labour Party wants to renegotiate Johnson's deal to ensure closer ties and then put it to the people in another referendum, with an option to remain in the EU. That slowdown reflects weaker global growth, driven by trade protectionism, and the domestic impact of Brexit-related uncertainties.

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It forecast growth in the U.K.in 2022 of 2%, outpacing the 1.75% it predicts for the U.S. Growth in the United Kingdom averaged 2% in the five years before the 2016 referendum vote.

Michael Saunders and Jonathan Haskel argued that the economy had "a modest but rising amount of spare capacity" and that underlying inflation was "subdued" below the bank's target rate of 2%.

The minutes meanwhile noted "downside risks to the MPC's projections from a weaker world outlook and from more persistent Brexit uncertainties affecting corporate and household spending".

By the time the Monetary Policy Committee meets again to decide on interest rates on December 18 everything may be up in the air again.

Any deal would have led to a cut in growth forecasts, but increased certainty will help to drive a near-term pick-up in investment growth, the bank added.

"In other words, it's not inconceivable that we see another sizeable change to the Bank's projections early next year, depending on who prevails at next month's election".

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