The Bank said on Thursday its nine rate-setters were unanimous in their decision to keep Bank Rate at its new record low of 0.25 per cent, the lowest in the BoE’s 322-year history.
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“News on the near-term momentum of the United Kingdom economy had, however, been slightly to the upside relative to the August inflation report projections”, the Bank’s statement said.
The pound slid lower against the dollar on Thursday after, but indicated that it could cut interest rates again unless the economy picks up. “There is enough evidence to suggest that while the economy may have slowed in Q3, it did not fall into recession, and the MPC note that data has actually been slightly stronger than they expected”.
The rate of annual consumer price inflation was also left unchanged in August compared the previous month, undershooting City analysts’s expectations of a pick-up in the wake of the Brexit vote and the plunge in the value of the pound.
“In terms of how the economy has responded, what’s happened directionally on business investment and commercial real estate and the bigger decisions and that relative to the resilience of the consumer sector, I feel comfortable that the judgement that the referendum represented a risk to monetary policy”.
Policymakers have likewise said there is room to extend all of their economy-boosting measures if needed, with potential to increase the initial £10 billion corporate-debt buying programme and the new scheme worth up to £100 billion to encourage banks to lend to households and businesses.
Last month the BoE chose to help Britain’s economy cope with the shock of the decision to leave the European Union with a stimulus package on a scale not seen since the depths of the global financial crisis.
LONDON-The Bank of England held its benchmark rate steady on Thursday but telegraphed that it still expects to cut it again later this year if the United Kingdom economy weakens as officials expect.
Data Thursday showed a gauge of United Kingdom retail sales fell less in August than economists forecast, suggesting consumer confidence remained resilient in the wake of the Brexit vote.
But the minutes revealed a majority of the MPC are still open to another rate cut, expected to around 0.1%, before the end of the year.
He said: ‘The recent evidence of United Kingdom economic resilience has seemingly diluted the case for more Bank of England stimulus in the immediate future. Nevertheless, since the August Inflation Report, a number of indicators of near-term economic activity have been somewhat stronger than expected.
“In summary, the immediate impact of the United Kingdom policy package on asset prices had been greater than expected, and the committee would monitor closely the extent to which those asset price movements would be transmitted through to the broader economy”.
But the Bank is still pencilling in a rise to around its 2% target during the first half of 2017.
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It said the near-term outlook for the housing market was less negative than it thought it would be and that consumption was stronger than expected.
