BoE leaves policy rate unchanged at 0.75% with unanimous vote as expected, GBP weakens

  • BoE keeps policy rate steady at 0.75% as expected.
  • Bank says tightening of monetary policy at gradual and limited pace needed, assuming smooth Brexit.
  • Notes downside risks to growth have increased since May. 

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

With the initial market reaction, the British pound came under a renewed pressure and weakened against both the dollar and the euro. Below are some key takeaways from the BoE's press release, as reported by Reuters.

"Bank of England policymakers vote 9-0 to hold interest rate at 0.75%."

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

"Policymakers vote 9-0 to maintain corporate bond-purchase target at 10 billion sterling."

"BoE cuts estimate of Q2 UK GDP quarterly growth to zero (May forecast +0.2% QoQ)."

"Downside risks to growth have increased since May as global trade tensions intensify, perceived likelihood of no-deal Brexit rises."

"Underlying economic growth in UK appears to have weakened slightly in first half of 2019."

"Ongoing tightening of monetary policy at gradual and limited pace needed, assuming smooth Brexit."

"UK financial conditions have loosened, implies stronger GDP, excess demand and inflation forecasts vs May."

"Market forward pricing for bank rate has fallen markedly, driven by global growth risks and rise in perceived likelihood of no-deal Brexit."

"Market moves show tension between BoE assuming a smooth Brexit and the market pricing in other Brexit scenarios."

"CPI likely to fall below 2% target later this year."

"Core services CPI slightly below levels consistent with meeting inflation target, unit wage cost growth consistent with target."

"Inflation expectations remain well-anchored."

"Sees increasing signs that wage growth rates might have levelled off."

"MPC agrees to reinvest 3.8 billion sterling of cash from maturing July 2019 gilt in QE programme."

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