- Bank of England leaves interest rates unchanged on Thursday at the November meeting of its Monetary Policy Committee.
- That means the UK will remain with a base interest rate of 0.75%.
- Rates are widely expected to increase further in the coming years, but the next move will almost certainly not happen until next year.
- While it left rates unchanged, the bank lowered its growth forecasts for the British economy in 2018 to 1.3%, down from 1.4%.
- At 12.30, Governor Mark Carney will take questions.
The Bank of England left interest rates on hold for another month on Thursday, as had been widely expected, but cut the UK’s growth forecast for the next two years.
Its nine-member Monetary Policy Committee voted unanimously to leave rates on hold at 0.75%.
Any outcome other than no change from the meeting would have been a significant surprise to markets.
Rates are widely expected to increase further in the coming years, but the timing of any rate hikes remains unclear, and the next move in rates will almost certainly not happen until next year. Any moves are going to be dependent on the progress of Brexit, the bank said.
“Were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate,” the MPC’s summary of its meeting said.
Alongside the decision on Thursday, the bank released its quarterly Inflation Report, which provides an update of its forecasts for overall economic growth and inflation.
Those forecasts included downgraded GDP growth for both 2018 and 2019, with 2018 growth now expected at 1.3% compared to 1.4% at its previous forecast, and 1.7% in 2019 compared to 1.8% previously.
Britain faces an uncertain economic future as Brexit looms. The British government remains adamant that it will strike a deal, and says one is 95% complete, but the exact shape of that deal isn’t entirely clear.
Should Britain fall out of the EU without a deal, the Bank of England would likely be forced into extraordinary measures – similar to those taken after the initial Brexit vote – as a means of protecting the UK from any negative shocked.
The bank has repeatedly said that it could either increase or decrease interest rates in the event of a no deal Brexit, and Carney reemphasised that on Thursday.
“The monetary policy response will not be automatic and can move in either direction,” he said during a press conference.
“There are scenarios where policy would need to be tightened in a no deal,” he added.
Carney continued, however, by saying that there is “little monetary policy can do to offset” the worst impacts of a no deal Brexit.
“The economic outlook will depend significantly on the nature of EU withdrawal, in particular the form of new trading arrangements, the smoothness of the transition to them and the responses of households, businesses and financial markets,” the summary of the MPC’s meeting said.