BOE left rate unchanged awaiting for more data after Brexit

This June, the UK referendum ended up with a leaving decision. UK is going to leave the EU after it complete several processes in the next two years. However, it is still unclear the impacts on UK’s economy. From the stock market after Brexit, FTSE obtained a significant growth after a flash crush regarding to the Brexit. Bank of England is now closely measured the impacts from this event and left the rate unchanged on the meeting yesterday. They are waiting for more economic data after Brexit to properly measure the economy condition.

While the nine-member Monetary Policy Committee noted that recent near-term data had been stronger than anticipated since the Brexit vote, it couldn’t draw inferences for its longer-term forecasts. Even though initial reports had been “slightly to the upside” of projections published in August, officials said their view of the “contours of the economic outlook” hadn’t changed.

Should the outlook in November remain “broadly consistent” with last month, when the BOE announced a new stimulus package, “a majority of members expected to support a further cut in bank rate to its effective lower bound” later this year. The committee sees that lower limit at close to, but just above, zero.

The BOE’s commentary was published alongside the latest policy decision on Thursday, which showed all members voted to keep the key interest rate at a record-low 0.25 percent. Officials were also unanimous on continuing with purchases of gilts and corporate bonds.

The pound was down 0.3 percent at $1.3191 as of 3:05 p.m. London time. It has dropped 11 percent against the dollar since the June 23 referendum.

With data since the U.K.’s June vote to quit the EU coming in better than expected and some economists lifting their forecasts, BOE officials led by Governor Mark Carney are taking stock after responding to Brexit with an extensive package of measures, including the first rate cut in more than seven years.

The central bank now sees economic growth of 0.3 percent this quarter. While that’s up from 0.1 percent previously predicted, it would still be just half the pace recorded in the three months through June. The policies seemed working in the economy in the past 3 months. But this result cannot totally erase the concerns for further Brexit impacts. Also how will Fed response to recent US economy and global growth will provide more details to BOE on making decision for its next meeting.

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