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BoE stays put on policy, waiting for Brexit result

By Alexander Bueso

Date: Thursday 21 Mar 2019

BoE stays put on policy, waiting for Brexit result

(Sharecast News) - The Monetary Policy Committee chose to stay put on policy, continuing to guide markets towards gradual hikes in Bank Rate, even as it noted how uncertainty around Brexit might be distorting the signals coming from recent economic data.
Policymakers at the Old Lady of Threadneedle Street did note the continuing tightness in the labour market, but also the continued "broad-based" softness in global GDP and the drag on business investment from the myriad uncertainties linked to Brexit.

Nevertheless, aside from higher unit wage costs "other indicators of domestically generated inflation have remained modest" the MPC said.

Rate-setters also pointed out how global financial conditions had eased, in part as several central banks around the world had announced easier policy.

In any case, what continued to matter most, they said, was what the "nature and timing of EU withdrawal" would be, especially the new trading arrangements that would be put in place and whether the transition was going to be abrupt or smooth.

On the basis of the above, the committee continued to judge that it would be right to continue easing back on policy accommodation "at a gradual pace and to a limited extent" in order to meet its 2% target for inflation "at a conventional horizon".

Both the decision to keep Bank Rate at 0.75% and those to maintain the stock of Gilts and corporate debt already purchased at £435bn and £10bn, respectively, were unanimous, as had been widely expected.

In an initial reaction following the announcement, the pound pared its losses versus the US dollar and as of 1232 GMT was down by 0.49% to 1.3133 while against the single currency it was at 1.1529.



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