Bank of England opts against a rate cut but warns of slow growth after Brexit

  • The BOE issued a downbeat forecast on the eve of Brexit.
  • The central bank forecast growth of just 0.8% in 2020, down from 1.3% in 2019 but rising to around 1.5% in 2021.
  • Sterling jumped 0.3% against the dollar to trade at around $1.3060 after the central bank’s Monetary Policy Commitee (MPC) voted 7-2 to keep the base rate at 0.75%.

The Bank of England (BOE) on Thursday held interest rates following Governor Mark Carney’s final monetary policy meeting.

Sterling jumped 0.3% against the dollar to trade at around $1.3060 after the central bank’s Monetary Policy Commitee (MPC) voted 7-2 to keep the base rate at 0.75%.

Weak GDP (gross domestic product) figures had led several members to mull a rate cut, but with January data showing an uptick in confidence and activity following the December 12 general election, expectations of an imminent cut had dampened.

The decision comes at a crucial time for the British economy, with the U.K. set to leave the European Union at 11 p.m. London time on Friday. British and European leaders will now enter pivotal negotiations in a bid to secure a free trade agreement before the end of 2020.

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