Bank of England keeps interest rates unchanged and warns Brexit uncertainty has ‘intensified considerably’

The Bank of England’s monetary policy committee said Brexit uncertainty had “intensified considerably” and warned of growing risks to the economy as it held interest rates for a third consecutive meeting.

The rate-setting committee, which raised rates to 0.75 per cent in August, unanimously voted to hold interest rates, it said today.

“Since the MPC’s previous meeting, the near-term outlook for global growth has softened and the downside risks to growth have increased,” the committee in a statement following its meeting.

“The further intensification of Brexit uncertainties, coupled with the slowing global economy, has also weighed on the near-term outlook for UK growth.

“Business investment has fallen for each of the past three quarters and is likely to remain weak in the near term,” it added.

The committee noted that recent wage growth had been higher than expected and the labour market remained tight.

It reiterated that the UK’s broader economic outlook was heavily dependent on Brexit and the nature of the withdrawal from the EU and that its monetary policy response would not be automatic and could be in either direction.

The MPC also unanimously voted to maintain its stock of UK government bond purchases at £435bn and its stock of corporate bonds at £10bn.

“After a chaotic few weeks, businesses will appreciate stability where they can get it,” Tej Parikh, senior economist at the Institute of Directors said.
“The Bank is being faced with mixed signals as it assesses recent economic data.

“The drop in inflation and oil prices are likely to ease the pressure to raise interest rates, but the pick-up in wages is pulling in the other direction,” he added.

Morning Wire’s shadow monetary policy committee unanimously voted to hold interest rates, with many of the panel of economists and experts citing Brexit uncertainty.

The panel noted that recent accelerated wage growth, which hit a ten-year high earlier this month, pointed towards potential future hikes