Mubasher: The Bank of England (BoE) on Thursday decided to maintain its benchmark rate at its current level.

The BoE’s Monetary Policy Committee (MPC) agreed on holding the main policy rate unchanged at 0.75% with a majority of 7-2 vote.
“The perceived likelihood of a no-deal Brexit has fallen markedly and the sterling exchange rate has appreciated,” the MPC said in a statement.

The vanishing risk of no-deal Brexit would eliminate some of the uncertainty facing businesses and households

As a result of these developments, the UK growth will pick up steam during the next year, the MPC projected.

Furthermore, inflationary pressures are set to ease in the near term.

The consumer price index (CPI), the UK’s headline inflation indicator was at 1.7% in September, and is expected to decline to nearly 1.25%, due to the falling regulated energy and water prices.

However, the BoE conceded if global growth fails to stabilise and Brexit angst persists, it may need to cut interest rates to boost growth and return inflation to its 2% target.

“This will be further supported by easier UK fiscal policy and a modest recovery in global growth,” the statement said.

The MPC decided unanimously to continue the stock of sterling non-financial investment grade corporate bond purchases, at GBP 10 billion ($12.87 billion).

Moreover, the committee voted to maintain the stock of government bond purchases, financed by the issuance of the central bank reserves at GBP 435 billion.

By 1:02 pm GMT, the GBP/USD pair fell by 0.25% to $1.2823, while the EUR/GBP pair rose by 0.36% to GBP 0.8640.