The Bank of England voted 9 to 0 to maintain Base Rate at 0.75%. The asset purchase target of £435 billion with a corporate bond target £10 billion for bond purchases was voted unaminous. Brexit uncertainty overhangs forecasts.
The Bank of England voted 9 to 0 to maintain Base Rate at 0.75%. The asset purchase target of £435 billion with a corporate bond target £10 billion for bond purchases was voted unaminous. Brexit uncertainty overhangs forecasts
Highlights:
Bank of England announces 1 August 2019 monetary policy decision
- Unchanged at prior 0.75%
- Official bank rate votes 0-0-9 vs 0-0-9 expected
- Asset purchase target £435 bn vs £435 bn expected
- Corporate bond target £10 bn vs £10 bn expected
Statement Breakdown
- Detailed projections do not include a no-deal Brexit possibility
- Continues to assume a smooth Brexit scenario In such an outcome, it would mean gradual rate hikes
- Gradual and limited tightening remains appropriate
- Monetary policy response to whatever form Brexit takes will not be automatic
- Rates could go in either direction
- Weaker short-term growth outlook reflects more entrenched Brexit uncertainty
- Labour market no longer appears to be tightening but pay growth is stabilising
- Estimates GDP growth of 0.0% q/q in Q2 2019
- Sees GDP growth of +0.3% q/q in Q3 2019
- Sees 2019 GDP of +1.3% (previously +1.5%)
- Sees 2020 GDP of +1.3% (previously +1.6%)
- Sees 2021 GDP of +2.3% (previously +2.1%)
- Inflation seen at 1.90% in one year’s time (previously 1.72%)
- Inflation seen at 2.23% in two years’ time (previously 2.05%)
- Inflation seen at 2.37% in three years’ time (previously 2.16%)
Source: Bank of England