Bank of England leaves interest rates unchanged amid Brexit chaos
The UK central bank’s monetary committee has opted to leave interest rates unchanged at 0.75% amid Brexit uncertainty.
The Bank of England’s (BoE) monetary policy committee (MPC) has decided to leave interest rates on hold amid ongoing Brexit uncertainty and the increased threat of the UK bailing out of the EU without a deal.
All nine members of the bank’s MPC voted to keep borrowing rates unchanged at 0.75%, a level where they have remained since August 2017.
Interest rates highly dependent on ‘nature and time’ of Brexit
The BoE noted that any change in interest rates depends ‘significantly on the nature and timing of EU withdrawal’, according to the minutes from the MPC meeting.
Another major consideration for the UK central bank in setting interest rates is maintaining inflation within 1% range, above or below its target of 2%.
‘The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate,’ the MPC said.
‘The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.’
Brexit continues to leave BoE’s hands tied on interest rates
Tej Parikh, senior economist at the Institute of Directors, said that the BoE is ‘paralysed’ by the ongoing political and economic uncertainty posed by Brexit.
‘Facing a Schrödinger’s Brexit in just over a week, the Bank of England continues to have its hands tied on interest rates,’ he said. ‘It’s virtually impossible for the Bank to make clear decisions right now while the various unknowns surrounding the future path for the economy linger.
‘All eyes will now be on any potential further communications from the Bank on how it might support liquidity and confidence in the event of a possible no deal,’ he added.
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