The Bank of England held interest rates steady at their record low of 0.25% on Thursday, after the November meeting of the bank’s Monetary Policy Committee (MPC).
Governor Mark Carney and the other eight members of the committee decided that taking Britain’s interest rate closer to zero is not the best course of action to mitigate the economic risks posed by the UK’s decision to leave the EU.
Holding steady at 0.25% was expected. Of all the economists and forecasters Business Insider spoke to prior to the decision, not a single one saw any new policy moves on Thursday.
After the bank cut rates in August for the first time since the financial crisis, markets widely priced a further rate cut to 0.1% — which the bank has signalled is its effective lower bound for rates — this month. However, since then, Britain’s economy has held up better than forecast, and that has pushed any further rate cut from the Old Lady of Threadneedle back in time.
On a year-to-year basis, growth was also higher than expected, with UK GDP 2.3% higher over the course of the last 12 months, compared to a forecast 2.1%. “There is little evidence of a pronounced effect in the immediate aftermath of the vote,” ONS Chief Economist Joe Grice said in a statement.
As well as leaving interest rates untouched, the Bank also voted 9-0 in favour of leaving its quantitative easing (QE) programme unchanged at a total of £435 billion.
Earlier this week, the bank announced that Carney has extended his term as the UK’s most powerful monetary policy official for an extra year, meaning he will leave his role in June 2019.
If everything goes reasonably smoothly, Britain will formally have left the European Union by that point — although Thursday’s landmark legal ruling that parliament must be allowed to vote on the triggering of Article 50 has thrown something of a spanner in the Brexit works.
Alongside the rate decision, the Bank of England released its quarterly Inflation Report, featuring updated forecasts for both inflation and GDP growth in the UK going forward.
At 12.30 p.m. GMT (8.30 a.m. ET) Governor Mark Carney will appear in front of journalists at a press conference to discuss the Inflation Report’s findings. Business Insider will be in attendance.
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