The Bank of England remained in ‘wait and see’ mode at its March interest rates meeting, indicating that uncertainties over Brexit were too great to provide a clear guide to the forces shaping the economy.
Unanimously voting to keep interest rates at 0.75 per cent on Thursday, the bank’s Monetary Policy Committee said that most companies thought they were ready for a no-deal Brexit, but being prepared still left them at the mercy of events beyond their control.
The nine members of the committee said that corporate investment appeared to be taking a further hit and was now between 6 and 14 per cent lower than it would have been without the uncertainties generated by Brexit.
The BoE’s decision to leave monetary policy unchanged was widely expected but recent strong data in the labour market, retail sales and the public finances have led some economists to expect a rate rise soon after Brexit uncertainties are resolved.
The MPC poured some cold water on these expectations, saying that it judged the data to be “mixed” and in line with its February forecasts which implied there was little urgency for interest rate increases.
The committee also said that with evidence of companies and households stockpiling for a chaotic Brexit, “short-term economic data may provide less of a signal than usual about the medium-term growth outlook”. – Copyright The Financial Times Limited 2019
