Uncertainty over Brexit to put freeze on interest rates
THE Bank of England is expected to keep interest rates unchanged at 0.75% today amid signs that Brexit uncertainty is wreaking havoc on the economy.
The Bank’s latest rates decision comes just days after industry data showed output in Britain’s dominant service sector almost ground to a halt in January, reaching its lowest level for two-and-a-half years.
Economists said the figures suggested growth may flatline in the first quarter of 2019, following disappointing purchasing managers’ index (PMI) readings for the manufacturing and construction sectors in January.
Today’s noon decision from the Bank is set to see the Monetary Policy Committee (MPC) vote unanimously to hold rates.
The Bank’s accompanying quarterly inflation report will also be eyed closely for cuts to its 2019 growth forecast after the latest slew of gloomy reports.
Howard Archer, chief economic adviser to the EY Item Club, said: “The weakened set of January PMI’s leave little doubt that the Bank of England will remain firmly in ‘wait and see’ mode on monetary policy at February’s MPC meeting this week, and until after the Brexit situation becomes clearer.”
The uncertainty caused by Brexit appears to be weighing not just on businesses, but also consumers as retail and house purchases appear to be impacted.