Money

Bank of England holds interest rates as it cuts growth outlook – business live


It was no surprise that the Bank of England kept interest rates on hold. Uncertainty in the UK economy remains acute, given the multiple different Brexit scenarios that are still in play. We expect the Bank to keep rates on hold until a clear outcome on Brexit has been determined. Lower interest rates are likely in the event of a no-deal scenario, while if a deal is struck and economic growth is maintained, the Bank would be likely to pursue its previous course of raising interest rates slowly. For now, inflation is not a major issue, as it remains close to the Bank’s target of 2%.

The Bank noted that Brexit uncertainty has become entrenched in the economy in 2019 and that this has pulled down the rate of economic growth to below trend. Our view on the economy is similar: we expect growth of 1.4% this year and 1.3% in 2020, on the assumption that a no deal Brexit is avoided. The Bank reduced its forecasts in its accompanying inflation report to 1.3% in both years. Subdued growth is likely to continue until businesses are provided with clarity on Brexit. Thereafter, a very wide range of outcomes are possible, depending on the access granted to the UK’s main trading partners in Europe.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.