Despite the climbdown, the MPC said it was still likely to cut interest rates again to just above zero later this year, even though the initial Brexit hit to Britain’s economy would be less severe than it expected.
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In addition, it upgraded its growth forecast for the third quarter to 0.3 percent from 0.1 percent, which it predicted last month.
In a Treasury Select Committee hearing, he said the cut in rates to a new all-time low of 0.25% from 0.5% and stimulus package worth up to £170 billion had already begun to cushion the blow of the Brexit vote.
Its governor Mark Carney last week defended the move, saying it was partly thanks to such action that the economy had held up after the June vote to exit the EU.
The Bank noted that news on the near-term momentum of the United Kingdom economy since the August Inflation Report has been slightly to the upside.
Howard Archer, chief United Kingdom economist at IHS Global Insight, said: “At this stage, we believe it is still just about more likely than not that the Bank of England will take interest rates down to 0.10% from 0.25% in November”.
“Nevertheless, since the August Inflation Report, a number of indicators of near-term economic activity have been somewhat stronger than expected”.
The BoE’s Monetary Policy Committee voted 9-0 to leave interest rates at 0.25% and the asset purchase programme at £435bn.
“The Committee will assess that news, along with other forthcoming indicators, during its November forecast round”. They are waiting for more economic data after Brexit to properly measure the economy condition. With more than five years’ experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic research. Central bank staff estimated the economy would grow by 0.3 percent in the July-September period, better than their previous forecast of a slow crawl of just 0.1 percent made in August.
Two members of the Monetary Policy Committee still have concerns that the stimulus of government-bond buying is too much: They decided not to vote against continuing “for now” given the potential costs of “immediately reversing” the program.
The Bank of England meets on Thursday, a meeting that has come back to the forefront of investors’ attention over the last few months following the UK’s vote to leave the European Union. The market is now pricing in a 6bp rate cut at the November meeting and 11bp in total in a year’s time.
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“A series of contradictory statements from leading Federal Reserve officials may mean the markets are unclear about what the United States central bank will do at next week’s monetary policy meeting but the Bank of England’s bias toward further interest rate cuts is plain for all to see”, said Russ Mould, investment director at AJ Bell.
