According to analysts expectations, the Bank of England left base rates still unchanged at 0.25 per cent, although two of the eight members of the Monetary Council voted interest rate hikes.
The British central bank announced on Thursday that it confirmed the base rate set in August last year. A year ago, the bank lowered the base rate from 0.50 percent to a historic lows of 0.25 percent. The 0.50 percent base rate was valid for more than seven years and was also a depth record.
The Monetary Council of the Bank of England unanimously voted £ 435 billion for the quantitative easing government bond buying framework and also unanimously decided to continue investing in corporate bonds for a year, a 10 billion-strong asset purchase program specially announced.
The amount of credit to British banks was raised from £ 100 billion to $ 115 billion. The Ministry of Finance’s support program, which has pegged 78 billion pounds to banks at low interest rates until February 2018, ends.
At the same time, the central bank also offset its forecast for economic growth this year from 1.9 per cent to 1.7 per cent and announced a 1.6 per cent increase next year instead of the previous 1.7 per cent.
The Governor of the Bank of England stated at the press conference following the announcement that the growth in gross domestic product will remain “shrinking” in the short term, but will come from “dullness”. The UK economy grew 0.3 percent in the second quarter after 0.2 percent in the first quarter.
The central bank forecasts a 2 percent rise in wages this year, which is below 2.6 percent of inflation. In 2018, it predicted a 3 percent increase in May instead of 3.5 percent.
According to Mark Carney, inflation may peak around 3% in October.
With regard to Britain’s EU membership and the uncertainty surrounding exit negotiations, it warned that the level of investment could be down by 20 percent by 2020 than predicted by the Monetary Council before the June 2016 Brexit referendum.
After the announcement, the pound exchange rate depreciated against the euro and the dollar.