The Bank of England has voted unanimously to leave interest rates untouched at 0.75% at its September meeting.
The inaction from the UK’s central bank was widely expected given the small change in economic indicators from August when the bank hiked the borrowing rate from 0.5% to 0.75%, a level not seen since 2009.
“Markets gave a zero percent chance of any action from the BoE today, and so it came to pass,” said Ben Brettell, senior economist at Hargreaves Lansdown.
Brexit uncertainty
Brettell said policy makers are firmly in a “wait-and-see” mode because of the long shadow cast by Brexit uncertainty and will be reluctant to consider another move until they have a clearer idea of what the final deal with the European Union looks like.
“Realistically May next year looks the first available opportunity to raise rates to 1%,” he said.
Alistair Wilson, head of retail platform strategy at Zurich, agreed that lack of clarity around Brexit was preventing the BoE from acting on firmer economic data.
“Unemployment is down and wages have outstripped inflation for four consecutive months, making a text book case for further increasing the base rate. But uncertainty around Brexit negotiations is causing the Bank of England to pursue a dovish policy, holding off on rising rates again so soon.”
Earlier this week governor Mark Carney committed to extend his term at the helm of the central bank until January 2020 in order to oversee the UK’s divorce from the EU.
