Bank of England’s monetary policy committee maintained interest rates at 0.75%, in a move that money managers said was unsurprising.
The bank announced Thursday that MPC members had voted unanimously to leave interest rates unchanged, at a meeting Wednesday.
The announcement said the near-term outlook for global growth had “softened and downside risks to growth have increased” compared with figures at the MPC’s meeting Nov. 1.
“Global financial conditions have tightened noticeably, particularly in corporate credit markets,” the announcement added. “Oil prices have fallen significantly, however, which should provide some support to demand in advanced economies.”
The fall in oil prices also means U.K. consumer price index inflation is likely to fall below the bank’s 2% target in the coming months.
Added to these concerns is that “Brexit uncertainties have intensified considerably since the committee’s last meeting. These uncertainties are weighing on U.K. financial markets,” with U.K.-focused equity prices having “fallen materially” and the pound sterling depreciating further, the announcement said. Volatility has also risen.
Increasing concerns about the U.K. leaving the European Union plus a slowing global economy “has also weighed on the near-term outlook for U.K. growth. Business investment has fallen for each of the past three quarters and is likely to remain weak in the near term.”
The MPC said the broader economic outlook continues to depend “significantly on the nature of EU withdrawal” — the form of new trading arrangements between the European Union and the U.K. in particular. It also depends on whether the transition is abrupt or smooth; and how financial markets respond.
In a statement Tim Graf, head of macro strategy for Europe, the Middle East and Africa at State Street Global Markets, said the bank’s “non-committal tone today is no surprise” given members of the MPC are still having to deal with “the significant uncertainties of Brexit.”
Mr. Graf added: “The path of future policy rates is contingent on outcomes that are still in the process of determination.”