The Bank of England keeps the interest rates unchanged at 0.75% in its policy meeting on Thursday

The Bank of England announced on Thursday that interest rates will remain unchanged at 0.75%. The bank, however, added if the Brexit driven uncertainty continues to weigh on the financial markets or if the global economic slowdown persists for long, the rate of borrowing may be cut in the subsequent months.

As per the announcement, the bank expressed confidence that the United Kingdom’s economy will soon start to pick up once the country’s organized departure from the European Union is finalized. Nonetheless, in light of the recent complications that have flared after PM Johnson’s announcement that the British government doesn’t plan on extending the transition period for the European Union, the bank stated that it will keep an eye on how the households and businesses react to the upcoming events of Brexit and global economic slowdown in order to determine the interest rates in the next months.

BoE’s Members Voted 7-2 In Favor Of Keeping Rates Unchanged At 0.75%

The Bank’s Monetary Policy Committee (MPC) voted to decide on the interest rates on Thursday at 12:00 GMT. With a majority of 7-2 in favor of keeping rates unchanged at 0.75%, the Bank of England abstained from further leniency in the monetary policy.

The BoE’s members had voted 7-2 in favor of keeping rates unchanged in November’s meeting as well. Earlier in November, the gross domestic product (GDP) for the third-quarter was noted at 0.3% that was narrowly below what the MPC had forecasted. The 0.1% growth in the fourth quarter also remained below the analysts’ expectations.

The report had further highlighted last month that while export orders and business investments failed to present optimism, household spending in the UK printed continuous and steady growth in November.

The BoE has now estimated inflation to weaken to 1.25% in the upcoming spring. According to financial experts, the estimate suggests a continuous weakening in the UK’s construction sector. The BoE’s experts responsible for analyzing and reporting the regional economic activity recently announced the weakest score for the UK’s construction sector in over six years.

Response In The Forex Market

The experts further highlighted the auto manufacturers to be facing the steepest decline with the same being mirrored in manufacturing exports at large.

Following the Bank of England’s announcement regarding the interest rates, GBP/USD lost traction in the forex market and dropped below the crucial resistance at 1.3060. The currency pair made a daily low of 1.2990. Recovering partially from the loss, however, the pair is currently exchanging hands at 1.3035.