Bank of England keeps stable rates amid growing global risks



[ad_1]

The Bank of England kept interest rates steady on Thursday, amid the possibility of an unsecured Brexit still hovering over the UK.

BOE officials had already spoken of the need for higher borrowing costs in the not-too-distant future, but Governor Mark Carney announced that the central bank's Monetary Policy Committee (MPC) unanimously voted to keep rates at 0.75%.

The ruling has indicated that the BOE is not planning to reverse direction in line with other major central banks, which have set a more dovish tone this week. At the May 2008 Inflation Report meeting, Carney suggested that markets were underestimating the central bank's rate trajectory, insisting that the next move would be positive.

On Tuesday, European Central Bank President Mario Draghi said more stimulus could be added to the euro zone, while the US Federal Reserve held rates steady on Wednesday but opened the door for a future cut in rates.

Britain's modest under-inflation rate is also helping the BoE to postpone further interest rate hikes while waiting for the outcome of the Brexit deadlock, although some officials have said in recent weeks that increases may be needed sooner or later.

UK economic data published on Wednesday showed that the country's inflation rate slowed in May with factory cost pressures dropping to the lowest level in three years. Consumer prices rose to an annual rate of 2% in May, meeting expectations.

BOE chief economist Andy Haldane said earlier this month that the rise in inflation to mitigate inflationary pressure is near, while MPC member Michael Saunders said that Brexit's uncertainty is no reason to postpone a policy more rigid indefinitely.

The tilt of the ECB and the Fed this week offered the pound a bit of rest. The British currency rose for the second consecutive day on Wednesday, having fallen 5% since early May, amid growing concern that Boris Johnson, the favorite to succeed Prime Minister Theresa May, would take the United Kingdom out of the European Union with or without an agreement. on October 31.

[ad_2]

Source link