BoE freezes rate, cites Brexit ‘uncertainty’

LONDON: The Bank of England (BoE) has voted to leave its main interest rate unchanged, it announced on Thursday (Friday in Manila), as it noted “greater uncertainty” surrounding Brexit.

The BoE’s nine policymakers, including governor Mark Carney who, this week, agreed to prolong his stay at the helm, post Britain’s EU departure next year, all voted at a regular policy meeting to keep the rate at 0.75 percent.

The Monetary Policy Committee (MPC) had, in August, voted unanimously to raise the rate by a quarter-point to help tame Brexit-fueled UK inflation.

“Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process,” said minutes of the latest meeting.

Finance minister Philip Hammond on Tuesday announced that Carney would remain BoE chief until January 2020 to steer the UK economy through possibly “quite a turbulent period” post-Brexit.

Britain is set to leave the European Union in March, while there are concerns about possible economic chaos for the nation should it depart without a divorce deal.

BoE minutes published on Thursday added that “the MPC continues to recognize that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal.”

The central bank added that “further protectionist measures by the United States and China, if implemented, could have a somewhat more negative impact on global growth than” forecast by the BoE in August.

Last month, the BoE raised its key lending rate for only the second time since the global financial crisis a decade ago.

The hike had been in response to UK annual inflation holding stubbornly above the BoE’s official 2.0-percent target.

Brexit uncertainty continues to weigh on the pound, pushing up the cost of goods imported into Britain.

A surge in oil prices over the past year has also fuelled inflationary pressures.

Despite Brexit concerns, the BoE on Thursday said the British economy was expected to have grown by 0.5 percent in the third quarter, up slightly on its prediction of 0.4 percent given last month.

It additionally agreed at this week’s meeting to maintain the level of its quantitative easing (QE), or stimulus cash, pumping around the British economy at £445 billion ($581 billion, 499 billion euros).

Elsewhere on Thursday, the European Central Bank kept eurozone interest rates at record low levels and confirmed its intention to scale back stimulus by the end of the year.