Bank of England leaves UK interest rates on hold at 0.5%

Mark Carney

The Bank of England has surprised the City by leaving interest rates on hold at its first policy meeting since the UK voted to leave the EU.

Rates were left on hold at an all-time low of 0.5% despite expectations that policymakers at Threadneedle Street would cut rates for the first time in more than seven years in an attempt to contain the economic fallout of the Brexit vote.

Economists polled by Reuters were expecting a quarter point cut in benchmark borrowing costs to 0.25%, which would be a new low in the Bank’s 322-year history.

Rates have been on hold at an all-time low of 0.5% since 2009, when the country was in the depths of the worst financial crisis in the postwar era.

The Bank’s nine-strong monetary policy committee also voted to leave its quantitative easing programme – where the bank creates new money to buy government bonds – unchanged at £375bn.

Economists said the Bank was likely to announce more stimulus at its meeting in August, when the Bank updates its forecasts for growth and inflation.

Philip Shaw, an economist at Investec, said: “The question then has become not if the MPC will ease, but ‘what, how much and when’.”

Before the 23 June referendum, economists thought the next policy move by the Bank would be an increase in rates, against a backdrop of economic growth, falling unemployment and a gradual rise in inflation.

More details to follow …

Powered by article was written by Angela Monaghan, for on Thursday 14th July 2016 12.00 Europe/ © Guardian News and Media Limited 2010


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