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November 14, 2019

UK left main interest rates unchanged

UKOn the eve of the start of negotiations for Brexit, the interest rates in the UK remain at record low levels. The monetary policy committee of the Bank of England (BoE) did not change after today’s meeting the levels of interest rates, which were reduced in August 2016, because of the consequences of the vote to leave the EU. This happens for the eighth consecutive month and a day after the US Federal Reserve raised its main interest rates.

By its decision the BoE wants to avoid economic slowdown, while Britain is preparing to leave the EU. Since the initial contraction of the economy did not take place, BoE sees no need to change interest. However, for the first time since July 2016 the decision is unanimous. The member of the central bank Kristin Forbes surprisingly voted to increase interest rates, transmits Reuters.

Institution keep the size of its program of buying assets at a level of 435 billion GBP.

The bankers are still experiencing some concern about inflation, which increased due to the devaluation of the GBP after the referendum on leaving the EU and a negative impact on consumer confidence of the British.

Bank of England signaled its willingness to temporarily ignore the purpose of accelerating inflation to 2%, not risking to put the economy in stagnation. The inflation is currently 1.8%, while analysts expect it to increase to 3% by year-end. Behind the surge in inflation lies not only rising energy prices, but also particularly sharp currency depreciation, which increases the price of imports.

The Prime Minister Theresa May plans later this month to officially inform the EU that her country will leave the community under Article 50 of the Treaty of Lisbon. A few weeks later will start the negotiations.

Earlier today the Bank of Japan expectedly left the main directions of its monetary policy unchanged. The central bank said in Tokyo that leaves a negative deposit rate at a level of -0.1%.

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