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01 August 2019

Interest rates held on Brexit concerns and global trade tensions

The Bank of England has held its interest rate steady at 0.75%, commenting on the news, Saul Fulda, Investment Analyst at Redmayne Bentley said:

“The Monetary Policy Committee was unanimous in its decision, which was widely expected from the economic world.

“Further to this, the Bank cut its UK growth forecast for 2019 and 2020, predicting output of just 1.3% for both; previous projections were 1.5% and 1.6% respectively.

“Policymakers warned that Brexit uncertainty and global trade tensions would potentially damage the economy, concurrently triggering a further drop in the value of the pound. The Bank forecasts also show a one in three chance that the economy will be shrinking by the start of next year.

“The Bank’s forecasts are assuming the UK leaves the EU with a deal, and on this basis the policymakers are likely to raise the interest rate in a measure to prevent overheating of the UK economy. This is the first time the Bank has acknowledged the likely impact of a no-deal Brexit, including a slowdown in growth, higher prices and a weaker pound.”
 
Ends
Notes to Editors
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Interest rates held on Brexit concerns and global trade tensions

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