By The Bank of England Monetary Policy Committee has made a unanimous decision to maintain the Base Rate at 0.75 per cent.
The committee reportedly voted to maintain the Base Rate at the current level to avoid the risk of an increase in inflation. Current soft oil prices and economic uncertainty in regard to Brexit all played into the widely anticipated decision to hold the rate steady.
The November retail sales figures weren’t considered as part of this month’s Base Rate decision, although they were better than expected and even saw a year on year increase.
Since the committee’s previous meeting, the UK’s financial markets have seen an increased level of uncertainty in the run-up to Brexit. The committee’s minutes elaborated stating that there has been a steep rise in the funding costs for both non-financial and high-yield corporate bond spreads which have been felt more in the UK compared to other advanced economies.
In the past three quarters of 2018, business investment has fallen and the outlook is set to remain weakened in the near-term from the close and into the start of 2019. The UK’s housing market has continued to remain subdued.
However, there have been indications to suggest that household consumption was more resilient in the face of a slowdown of retail spending, according to the minutes.
A summary of the key decision factors from the Monetary Policy Committee is below. Read the full statement from the Bank of England here.
“Since the MPC’s previous meeting, the near-term outlook for global growth has softened and the downside of risks to growth have increased. Global financial conditions have tightened noticeably, particularly in corporate credit markets. Oil prices have fallen significantly, however, which should provide some support to demand in advanced economies.
“The decline in oil prices also means that UK CPI inflation is likely to fall below 2 per cent in coming months. The Committee judges that the loosening of fiscal policy in Budget 2018, announced after the November Inflation Report projections were finalised, will boost UK GDP by the end of the MPC’s forecast period by around 0.3 per cent, all else equal.”
Read November 2018’s MPC decision:
MPC Votes to Maintain the Base Rate at 0.75%
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