The Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to maintain the Bank Rate at 0.75%.
The UK’s central bank raised the Bank Rate by 0.25 percentage points in August.
In the minutes of the meeting, the MPC wrote: “The economic outlook will depend significantly on the nature of EU withdrawal, in particular the form of new trading arrangements, the smoothness of the transition to them and the responses of households, businesses and financial markets. The implications for the appropriate path of monetary policy will depend on the balance of the effects on demand, supply and the exchange rate. The MPC judges that the monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.
“At this meeting the MPC judged that the current stance of monetary policy remained appropriate. The Committee also judges that, were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.”
Frances Haque, Santander UK chief economist, said: “The decision to hold rates was widely expected by both the market and commentators, despite the more positive outlook for Q3 economic growth.
“Although inflation remains above the 2% level and wage growth has tipped 3%, the MPC looks to have remained cautious in its approach, wanting to wait until the outcome on Brexit is known before raising rates further.
“Assuming a Brexit deal can be reached, the MPC will now likely wait until after March 2019 before hiking rates again.”