The bank’s governor, Mark Carney, has repeatedly expressed willingness to deploy all the tools at his disposal to ameliorate the effects of Brexit, including loosening monetary policy.
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In contrast to many analysts’ expectations, the BoE’s Monetary Policy Committee voted 8-1 to leave its benchmark interest rate at 0.5 percent, where it has been since 2009.
“The Committee will consider over the coming period how the outlook for the economy has changed in light of the referendum result and will publish its new forecast in its forthcoming Inflation Report on 4 August”.
Whether or not a rate cut occurs tomorrow or in August, markets expect that by the end of the British summer, the BoE will unveil a fresh means of stimulating the economy, as the government heads into tough negotiations on quitting the EU.
A body that represents businesses in the East Midlands has welcomed the Bank of England’s decision to leave interest rates unchanged.
The pound rose 1.5 per cent to $1.3341 by 1.52pm London time, having earlier touched $1.3475, the highest since June 30.
In spite of market uncertainty over the past three weeks, lenders across the United Kingdom are taking advantage of the market to offer lower rate mortgages to potential buyers.
It slid back into negative territory after the bank held rates, before edging higher again.
Only one of the Monetary Policy Committee’s nine rate-setters – Jan Vlieghe, who has previously floated the idea of more help for the economy – voted for a cut at the July meeting.
“But it should not have come as a total shock, as there was always a strong chance the Bank would stand pat”, said Neil Wilson at ETX Capital.
“The lack of clear direction is more likely to add to economic uncertainty and therefore be detrimental to demand and the economy”, said Angus Armstrong, the director of macroeconomics at the National Institute of Economic and Social Research.
“He is clearly keeping further monetary policy powder dry until it is most needed, should we start to see a meaningful slowdown”, Nancy Curtin, chief investment officer at Close Brothers Asset Management, said.
Before it, the bank had been expected to raise rates.
Britain’s new finance minister Philip Hammond earlier Thursday ruled out an emergency budget in response to economic turbulence triggered by the country’s vote.
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“Some key Northern Ireland sectors such as aerospace and pharma could also become more competitive, if the pound remains weak compared to the United States dollar”.
