BoE maintains Bank Rate at 0.75%

The Bank of England (BoE) announced its Monetary Policy Committee (MPC) voted by a majority of 7-2 to maintain Bank Rate at 0.75 percent at its September meeting.

The MPC also voted unanimously to maintain the corporate bond purchases at £10 billion and UK government bond purchases at £435 billion.

In its statement, the BoE notes:

• The underlying UK GDP growth has slowed materially this year due to weaker global growth, driven by trade protectionism, and the domestic impact of Brexit-related uncertainties;
• The perceived likelihood of a no-deal Brexit has fallen markedly and the sterling exchange rate has appreciated after the UK and EU agreed a Withdrawal Agreement and Political Declaration as well as a flexible extension of Article 50 in October;
• These agreements are expected to remove some of the uncertainty facing businesses and households, and the MPC projects that UK GDP growth will pick up during 2020;
• Inflationary pressures are projected to lessen in the near term;
• Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2% target;
• The Committee will monitor closely the responses of companies and households to Brexit developments as well as the prospects for a recovery in global growth;
• If global growth fails to stabilize or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation;
• Provided these risks do not materialize and the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy, at a gradual pace and to a limited extent, may be needed to maintain inflation sustainably at the target.