It would bring interest rates down to a new historic low and mark the first change since March 2009, when the Bank slashed rates to the all-time emergency low of 0.5% at the height of the financial crisis.
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Mr Carney previously warned British families to prepare their finances for a three per cent rise in the coming years.
BoE governor, Mark Carney, had originally said “some monetary policy easing will likely be required over the summer”, which is still true as summer is not over yet.
The Bank of England’s decision to hold interest rates at 0.5% has seen sterling rally – showing increased confidence the United Kingdom economy.
“Most members of the committee expect monetary policy to be loosened in August”, according to the statement.
But the Bank’s rate-setters said on Thursday they would wait three more weeks to see the intensity of the Brexit hit to Britain’s economy before deciding on the need for any stimulus.
LONDON (AP) – The British pound surged Thursday while the country’s main stock index faltered after the Bank of England held off from cutting interest rates.
The decision to hold rates pushed sterling to a two-week high against the USA dollar and government bond yields rose.
Sterling plunged more than 13% against the dollar in the days after the vote and trillions of dollars were wiped off stock markets globally.
Germany’s DAX jumped 1.3%, France’s CAC 40 rose 0.9% and Britain’s FTSE 100 was 0.6% higher.
Twelve-month CPI inflation was 0.3% in May and remains well below the 2% inflation target, while measures of core inflation have been stable at a little over 1%, notes the committee.
“We expect economic data to soon start confirming that the economy has slowed to a standstill in the wake of the referendum”, said Reinhard Cluse, chief European economist at UBS AG.
“The improved resilience of the core of the United Kingdom financial system and the flexibility of the regulatory framework, had allowed the impact of the referendum result to be dampened rather than amplified”, according to minutes of the MPC meeting.
“Regarding the housing market, survey data point to a significant weakening in expected activity”.
They also have to consider inflation, which could burst back into life as the weak pound forces up the cost of imported goods (and the United Kingdom imports a lot).
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The decision is having a mildly negative effect upon equity markets so far, as it calls into some question the extent of forthcoming “helicopter money” QE programs that are on the table at several central banks. But with rates already so low, the Bank only has one bullet in the chamber – and today it opted to delay pulling the trigger.
