MPC maintains Bank Rate at 0.75%

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The Bank of England’s Monetary Policy Committee (MPC) has once again unanimously voted to maintain the Bank Rate at 0.75%.

Frances Haque, Santander UK chief economist, said: “Given the continued uncertainty over the timing and nature of Brexit, the decision to hold rates will not be a surprise to the market.

“While growth in the first quarter of this year looks set to be stronger than previously expected, the MPC continues to be cautious in its approach, waiting until the Brexit outcome is clearer before raising rates further.

“It now looks increasingly unlikely that we will see a rate rise this year.”

Ed Monk, associate director, Fidelity International, added: “The Bank struck a dovish tone in its outlook for rate rises and inflation today. That’s potentially good news for households who can expect mortgage and other borrowing costs to remain low. The worry is that, as the Bank outlines, the reason rates won’t rise sooner is that growth is expected to slow. This reflects global trends, but also the effect that Brexit is having, and the now established trend of lower business investment that has been created by the ongoing uncertainty about our relationship with the EU.

“Uncertainty has provided cover for Mark Carney to keep rates on hold and it’s an open question as to whether he will oversee another rise in rates before he departs the Bank next year. Whether we get a rise this year or not, let’s remember that rates would still be at historically low levels, with further rises likely to be very gradual. This environment is likely to support risk assets over cash, particularly if inflation returns more strongly.”

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