The Bank of England says it is taking a wait-and-see approach to interest rates despite a downgrade to its forecast for UK growth.
The latest meeting of its monetary policy committee (MPC) held Bank rate at 0.75% – with its nine members remaining split on whether to cut rates amid a stagnant economy from continued global, Brexit and political uncertainty ahead of the UK election.
The vote in favour of no change came in at 7-2 with Michael Saunders and Jonathan Haskel continuing to argue for a cut to lower borrowing costs and boost activity.
The Bank said that it had cut its own forecast for UK GDP growth in the fourth quarter to 0.1% from November’s prediction of 0.2%.
While it noted limited progress in resolving the US-China trade war, that has depressed growth globally, it said the domestic factors had continued to weigh on demand.
Its statement said: “If global growth failed to stabilise or if Brexit uncertainties remained entrenched, monetary policy might need to reinforce the expected recovery in UK GDP growth and inflation.”
It added that it was too soon to gauge whether Boris Johnson’s victory had unlocked some of the pent-up demand.