The Bank of England’s (BoE) Monetary Policy Committee (MPC) has today unanimously voted to maintain Bank Rate at 0.75 per cent.
Along with maintaining bank rate, the committee also voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10bn, while additionally voting to maintain the stock of UK government bond purchases at £435bn.
In its announcement, the committee said: “Brexit uncertainties have intensified considerably since the Committee’s last meeting. These uncertainties are weighing on UK financial markets. UK bank funding costs and non-financial high-yield corporate bond spreads have risen sharply and by more than in other advanced economies. UK-focused equity prices have fallen materially. Sterling has depreciated further, and its volatility has risen substantially. Market-based indicators of inflation expectations in the United Kingdom have risen, including at longer horizons.”
Commenting on the decision, State Street Global Markets head of macro strategy Tim Graf said: “Having updated forecasts last month and still finding themselves having to forecast deal with the significant uncertainties of Brexit, the Bank of England’s non-committal tone today is no surprise. The path of future policy rates is contingent on outcomes that are still in the process of determination.
“We don’t see sterling or UK rates moving much on data or central bank commentary alone, until some clarity over the nature of the UK’s working relationship with the EU emerges.”
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