The Bank of England (BoE) kept its key interest rates unchanged, while suggesting that it may accelerate in the future, but only after Brexit. The bank said its future policy would depend entirely on the way Brexit.
The decision to preserve the interest was taken unanimously, so it remains at the level of 0.75%. The last time interest rates were raised in August – just the second rise since the financial crisis.
Most analysts say it is unlikely that interest rates will increase again before mid-2019.
Brexit has become a major factor in the economic projections of the world’s fifth-largest economy, which growth is slowing down since the Brexit referendum in June 2016.
According to the BoE, consumer spending has performed better than expected in recent months, but the business continues to be cautious about investment until it is given more clarity about future bilateral EU-UK relations.
“The recent increase in uncertainty around Brexit seems likely to keep the cost of business”, said the BoE. The bank also added that the monetary policy response to Brexit – no matter what form it would be – “will not be automatic and may be in any direction”.
If, after all, a smooth Brexit is achieved, the UK economy is likely to continue to grow by about 1.75% per year, according to the BoE. This is below the 2% level that was expected for the country before the 2016 referendum. However, the central bank said the economy is working at full capacity, and inflation will take three years to drop from 2.4 % to the target of 2%.