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Home / Business / The Bank of England holds interest rates ahead of the snap election

The Bank of England holds interest rates ahead of the snap election



Bank of England

Justin Tallis | AFP | Getty Images

The Bank of England (BOE) held interest rates stable on Thursday, opting not to adjust borrowing costs in the world's fifth-largest economy ahead of a snap election.

With 35 days left before the British made the trip to the poll, BOE's nine-member Monetary Policy Committee (MPC), led by Mark Carney, voted to keep interest rates at 0.75%.

Seven central bank politicians voted to leave interest rates unchanged, but two MPC members surprised the financial markets by voting for a cut on Thursday. Sterling traded at $ 1

.2828 shortly after the announcement, dipping nearly 0.2%.

Much has changed in British politics since the MPC last voted to leave interest rates unchanged in mid-September.

Prime Minister Boris Johnson finally failed to rush the Brexit deal through parliament, prompting the Right Leader to request a Brexit extension and call for a snap vote on December 12.

The EU agreed to push the Brexit deadline back to the end of January, with an earlier departure possible if UK lawmakers ratify their divorce agreement.

Economists believe BOE will cut interest rates at some point next year amid a receding economy and Brexit uncertainty.

Market expectations for an interest rate cut in the quarter of 2020 are about 55%, according to the CME BOE Watch Tool.

A prolonged US-China trade war and a global economic downturn have prompted the Federal Reserve and the European Central Bank to cut interest rates for months, but so far BOE has refused to follow suit.


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