Bank of England leaves policy rate unchanged at 0.75% in December as expected

  • Bank of England (BoE) held policy rate steady at 0.75%.
  • BoE left Asset Purchase Facility unchanged at £435 billion.
  • Two members of the MPC voted in favour of a rate cut.

In a widely expected decision, the Bank of England's Monetary Policy Committee held the policy rate unchanged at 0.75% in December. The asset purchase facility remained steady at €435 billion as well.

The GBP/USD pair fluctuated sharply with the initial reaction but struggled to make a decisive move in either direction. As of writing, the pair was up 0.15% on the day at 1.3097. Below are some key takeaways from the policy statement, per Reuters.

"Policymakers vote 9-0 to maintain gilt purchase target at 435 billion GBP."

"Can't tell yet how much policy uncertainties for companies and households have declined since the election."

"If global growth fails to stabilise or Brexit uncertainties remain entrenched, monetary policy may need to reinforce expected UK recovery."

"Further ahead, if risks do not materialise and economy recovers broadly as expected, some modest tightening of policy, at gradual pace and to limited extent, may be needed."

"BoE staff cut forecast for UK GDP growth in Q4 to +0.1% QoQ (November forecast +0.2% QoQ)."

"Global growth has shown tentative signs of recovery since MPC's November meeting."

"Partial de-escalation of US-china trade war gives some additional support to outlook."

"Seeing continued signs that UK labour market is loosening but it remains tight."

"Pay growth has eased but unit labour costs growing at rates above those consistent with meeting inflation target in medium term."

"CPI still expected to fall to around 1.25% in spring due to temporary effects of lower energy and water prices."

"Agents' report suggests some investment plans put on hold since Brexit referendum could be reinstated."

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