Bank of England freezes rate
THE Bank of England is keeping its key interest rate at a record-low 0.25 percent, with no indication that the Brexit vote outcome was hurting the economy.
The BoE said after a regular monetary policy meeting last week that it expected “less of a slowing in UK GDP growth in the second half of 2016” following better-than-expected economic data in the wake of Britain’s vote to exit the European Union.
The decision raised questions among analysts over why the BoE last month cut the rate from 0.5pc.
Its governor Mark Carney defended the move, saying it was partly thanks to such action that the economy had held up after the June vote to exit the EU.
Minutes from the latest monthly meeting stressed that the central bank could still decide to cut the rate further to just above zero percent before the end of the year.
“What’s interesting is that despite the better-than-expected data ... [BoE policymakers] think they will have to cut rates again this year,” said ETX Capital markets analyst Neil Wilson.
Analysts’ consensus forecast is for the BoE to cut the rate to 0.1pc in November after Mr Carney warned that Britain still risked falling into recession over Brexit, though the probability had lessened in recent weeks.
The BoE added that it had also decided at its meeting against increasing the amount of cash stimulus pumping around the British economy.
Alongside its quarter-point rate cut in August, the BoE agreed to reactivate its quantitative easing (QE) bond-buying scheme, lifting it by £60 billion (US$79 billion) to £435 billion in the first increase since 2012. –