Later today The Bank of England (BoE) will release its first Interest Rate publication for the year. The fact that the way towards Brexit, and its outcome, are still unsure, seems to put the growth of the British economy at a sluggish pace.
Brexit is only 50 days away and this uncertainty may lead to BoE’s Monetary Policy Committee to vote to keep their benchmark borrowing rate unchanged at 0.75 percent, according to Reuters polls of economics. Experts have also said that policy makers could hold off raising rates until there is some clarity as to what will happen with Brexit.
Chief Economic Adviser to the EY Item Club, Howard Archer said, “the weakened set of January PMI’s leave little doubt that the Bank of England will remain firmly in ‘wait and see’ mode on monetary policy at February’s MPC meeting this week, and until after the Brexit situation becomes clearer.”
It remains to be seen how Brexit will play out and how this will ultimately affect the economy. If the outcome will be a no deal exit, then BoE said that “it might raise rates due to the inflationary impact of a likely slump in the value of the pound, although most economists think it would cut them to cushion the blow to the economy.”
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