In a widely expected decision, the Bank of England’s Monetary Policy Committee held the policy rate unchanged at 0.75% with a unanimous vote. The asset purchase facility remained steady at €435 billion as well. Now markets are waiting for Governor Carney to deliver his remarks at a press conference. Below are some key takeaways from the monetary policy statement.
- The Committee voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.
- Over the forecast period, household consumption is expected to grow modestly relative to historical rates, broadly in line with real incomes.
- The global economy continues to grow at above potential rates, supporting UK net trade.
- Growth has softened, however, and become more uneven across countries, and downside risks have risen.
- Regular pay growth has been stronger than expected, rising to over 3%.
- The economic outlook will depend significantly on the nature of EU withdrawal, in particular the form of new trading arrangements, the smoothness of the transition to them and the responses of households, businesses and financial markets.
- The MPC judges that the monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.
- At this meeting the MPC judged that the current stance of monetary policy remained appropriate.
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