london skyline

United Kingdom Monetary Policy November 2018

United Kingdom: BoE leaves rates unchanged

At its meeting ending on 31 October, the Monetary Policy Committee (MPC) of the Bank of England (BoE) voted unanimously to keep the Bank Rate unchanged at 0.75%. The Bank was also in full agreement to maintain the stock of investment-grade corporate bond purchases at GBP 10 billion and to maintain the total stock of UK government bond purchases at GBP 435 billion, financed by the issuance of Central Bank reserves. All decisions were in line with market expectations.

Following a rate hike in August, the decision to stay put in November was no surprise. Headline inflation dimmed in September following a surprise uptick in August, and core price pressures are mild. Moreover, the economy looks set to lose steam in the fourth quarter, and the government is yet to reach a Brexit agreement with the EU. The confluence of these factors led the Bank to decide that it was premature to continue its tightening cycle, which began in November last year. The BoE was unable to factor in the recently announced 2019 budget in its decision-making process, although the measures announced in the budget are unlikely to significantly alter the Bank’s stance.

In its communiqué, the BoE reiterated its guidance that monetary policy will tighten going forward, albeit gradually and to a limited extent. The Bank also emphasized the impact Brexit could have on monetary policy decisions, and left the door open to monetary easing in the case of a disorderly withdrawal. Assuming an orderly EU withdrawal, domestic price pressures are likely to build on emerging capacity constraints, necessitating subsequent rate hikes. Virtually all FocusEconomics panelists see the BoE raising rates at least once next year to ensure inflation returns to target.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest