ZCZC
BCN-16
BRITAIN-RATE-FOREX-BOE
Bank of England holds rate awaiting Brexit deal
LONDON, Dec 21, 2018 (BSS/AFP) – The Bank of England has voted to keep its
main lending rate at 0.75 percent faced with “intensified Brexit
uncertainties”, minutes of its latest regular monetary policy meeting
revealed Thursday.
As widely expected, the BoE’s Monetary Policy Committee decided against
lifting borrowing costs, also as tumbling oil prices help to push down
inflation.
“Brexit uncertainties have intensified considerably since the committee’s
last meeting” on November 1, the minutes said.
Since that meeting seven weeks ago, the BoE has warned that a no-deal
Brexit could trigger a financial crisis in Britain, while the pound could
plunge by as much as 25 percent.
Meanwhile minutes of the latest meeting that concluded Wednesday said that
“the further intensification of Brexit uncertainties, coupled with the
slowing global economy, has… weighed on the near-term outlook for UK
growth”.
They added: “Business investment has fallen for each of the past three
quarters and is likely to remain weak in the near term.
“The housing market has remained subdued. Indicators of household
consumption have generally been more resilient, although retail spending may
be slowing.”
British retail sales did rebound strongly in November, however, as
shoppers bagged Black Friday bargains, official data showed on Thursday.
Total sales jumped 1.4 percent compared to October, the Office for
National Statistics calculated, with non-food items helped by heavy price
discounts.
That beat analysts’ consensus forecast for a modest 0.3-percent increase.
Meanwhile with less than 100 days until Britain is set to officially
depart the European Union, British MPs head off for Christmas, leaving a
country in limbo with no divorce deal in place and total confusion over what
happens next.
“The broader economic outlook will continue to depend significantly on the
nature of EU withdrawal, in particular: the form of new trading arrangements
between the European Union and the United Kingdom; whether the transition to
them is abrupt or smooth; and how households, businesses and financial
markets respond,” the latest BoE minutes said.
“The appropriate path of monetary policy will depend on the balance of the
effects on demand, supply and the exchange rate.
“The monetary policy response to Brexit, whatever form it takes, will not
be automatic and could be in either direction,” the minutes added.
At its latest meeting, BoE policymakers voted also to maintain the central
bank’s quantitative easing stimulus policy, under which it has pumped o445
billion ($564 billion, 492 billion euros) around the UK economy.
BSS/AFP/HR/0935