87 months and counting -- Bank of England holds again

Another month, another hold.

The Bank of England’s Monetary Policy Committee has once again unanimously voted to leave its base interest rate at 0.5%. It has now been 87 months since the BoE did anything to interest rates.

With exactly one week to go until the UK votes on whether or not to leave the European Union, had the bank done anything other than leave rates on hold it would have been an enormous surprise.

With inflation growth slowing — CPI hit just 0.3% at the last reading — the state of GDP growth, which slowed to 0.4% in Q1 2016, and the Brexit referendum, which has effectively put the British economy into a holding pattern, the BoE is remaining dovish in tone.

All nine members of the bank’s Monetary Policy Committee voted to hold for a fifth straight month, despite market speculation that at least two members of the committee have been considering voting for a cut in recent months.

In February, the MPC’s sole hawk Ian McCafferty, who had previously voted for a rise to 0.75%, changed his position and voted to hold rates, a position that has remained ever since.

General market consensus has been pricing the next interest rate hike as far out as 2020, with many analysts now predicting a cut long before a hike.

Along with the rate hold, the bank left its Asset Purchase Facility unchanged at £375 billion ($530 billion).

More to come…

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