Bank of England committee votes to keep interest rates paused

Bank of England committee votes to keep interest rates paused

The Bank of England has postponed any increase in interest and has put rates on hold at 0.75%.

The financial giants have hinted that the cost of borrowing may decrease if global economic growth fails to recover or if Brexit uncertainties continue, but it´s expected that the UK economy is expected to regain its strength.

The Bank´s Monetary Policy Committee (MPC) voted 7-2 in favour of keeping the official rate at a standstill while it monitors companies´ and households´ reactions to Brexit and global growth.

The agents who perform regular checks to observe regional economic activity around the UK recently gave the construction sector the lowest score in six-and-a-half years. The agents also specified failing manufacturing exports with car-making suffering the most.

As household spending continued to grow steadily, business investment and export orders had remained weak.

Third-quarter gross domestic product (GDP) growth was 0.3%, “a little weaker” than the Monetary Policy Committee (MPC) predicted back in November. The fourth quarter is also expected to be even weaker with an estimated growth of 0.1%.

The MPC now expects inflation to subside to 1.25% in the spring which largely shows the construction sector´s weakness.

The committee released a statement that said: “If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in GDP growth and inflation”.

Two experts on the nine-member panel, Jonathan Haskel and Michael Saunders, said the weakness of the economy warranted an immediate reduction to 0.5%, however, the remaining seven, including the bank´s governor, Mark Carney, voted to leave borrowing costs unchanged at among the lowest levels on record.

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