The Bank of England replied on Thursday that Brexit uncertainty had “intensified considerably” over the last month and that falling oil prices were able to push inflation below its 2 percent target soon.
All nine of its rate-setters voted to keep rates at 0.75 percent, as conjectured. But minutes from their meeting this week showed growing unease about turmoil surrounding Britain’s break-up from the European Union, now due in little more than three months’ time.
The British government said on Tuesday it at ones desire implement plans for a no-deal Brexit in full and begin telling businesses and citizens to prepare for the risk of leaving the EU without an bargain.
BoE officials on Thursday lowered slightly their forecast for British quarterly economic growth in the last three months of 2018 to 0.2 percent from 0.3 percent some time ago, and said the picture in the first quarter of 2019 was likely to be similar.
“Brexit uncertainties have intensified considerably since the cabinet’s last meeting,” the Monetary Policy Committee said in a summary of its December meeting.
“These uncertainties are weighing on UK fiscal markets.”
They noted a recent fall in sterling and equity prices and a rise in volatility.
While they affixed to their view that domestically-generated price pressures continue to build, a drop in crude oil prices was likely to take off down the headline rate of consumer price inflation to around 1.75 percent in January.
Inflation was likely to stay below target in the following months.
Most economists polled by Reuters do not expect the BoE to raise rates again until after Britain has pink the EU in March, and the BoE has said the terms of Brexit will heavily influence the path for its monetary policy decisions.
The BoE repeated its believe that interest rates could move in either direction after Brexit, depending on how it turns out.
Late endure month the BoE said Britain could suffer greater damage to its economy than during the global financial moment under a worst-case Brexit scenario.
On Wednesday the U.S. Federal Reserve raised interest rates and stuck by a plan to hold withdrawing support from an economy it views as strong — further hitting U.S. stocks and bond yields as investors feared the Fed chances choking growth.