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20 December 2018

BBC: Bank cuts growth forecast amid Brexit worries


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The Bank of England has cut its UK growth forecast and warned a lack of Brexit clarity is hitting the economy.


The Bank said uncertainty over the UK's departure from the EU had "intensified considerably" over the past month.

Against a backdrop of weaker global growth, the Monetary Policy Committee (MPC) voted unanimously to keep interest rates at 0.75%.

It said the economy was likely to grow by 0.2% in the final quarter of 2018, down from an earlier forecast of 0.3%.

That follows growth of 0.6% in the previous quarter.

The Bank expects slower economic growth to continue into 2019.

What next for rates?

The Bank of England last raised interest rates in August to 0.75%, but has been reluctant to push them higher while uncertainty remains over Brexit.

But if there is a deal, economists say the Bank is likely to make a move.

"We continue to think that the MPC won't wait for signs of a recovery to emerge in the data and will raise Bank Rate to 1.0% in May," said Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics.

Paul Dales, Chief UK Economist at Capital Economics, sees a sharp increase in rates, if there is a "smooth" Brexit outcome.

"Our money is currently on a faster rebound in GDP growth prompting the Bank to raise rates by 0.25% three times next year and two more times in 2020," he said. [...]

Full article on BBC

Bank of England's press release



© BBC - British Broadcasting Corporation


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