Bank of Eng­land freezes rate

The Myanmar Times - - International Business -

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. –

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