UK Central Bank Keeps Benchmark Interest Rate at 0.75%
The British central bank has left its monetary policy unchanged. The BoE’s Monetary Policy Committee voted unanimously to hold interest rate steady at 0.75%, after lifting it to the highest since 2009 last month. The regulator also noted, that further rate increases are likely to be gradual and limited. Investors see the next quarter-point increase in May.
The bank reiterated its view that “limited” and “gradual” rate increases will be needed over the next few years to return inflation to its 2% target. The UK annual rate of inflation is currently running at 2.5%, after falling back from its peak of 3.1% in November.
The committee also noted that downside risks to global growth had increased as trade tensions escalated and emerging markets became more volatile. Policymakers said economic activity has been better than expected, pointing to growth of 0.5% in the third quarter instead of the August estimate of 0.4%.
The Bank of England has repeatedly warned that Brexit could damage the economic recovery. Brexit remains the biggest challenge to the outlook and that uncertainty about the UK’s future outside the European Union had risen since the last meeting.