The Bank of England has kept interest rates on hold at 0.75% ahead of mounting fear about Britain withdrawal from the European Union.
The Bank said that all the nine rate setters in Monetary Policy Committee voted in favor of interest rates to remain unchanged. The vote of 9-0 left interest rates to stand still at 0.75% after eyeing a needle change of quarter-point rise last month, second time in a decade.
“Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the (European Union) withdrawal process,” the central bank said.
The BoE staffs’ reports revealed that due to raising concerns on Britain’s March 2019 exit from the EU, the businesses were tightening cost control and holding back on investment. In the survey to exporters it was seen that there is 40% chance of getting the sales hurt post-Brexit.
The BoE raised interest rates by 0.25% in August this year to meet the inflation target of 2.5% over the next two or three years. But now, most economists believe that Bank of England would not raise rates again until after the Britain has left the EU.
As per the media reports, last week governor, Mark Carney cautions legislators on economic difficulties if Britain left the EU without a trade deal. This could considerably squeeze the British households’ incomes in future.
Further, BoE’s regional staff raised their forecast for economic growth in the third quarter to 0.5% from 0.4% on the back of higher consumer spending over an unusual warm summer.
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