The Bank of England’s Monetary Policy Committee (MPC) decided unanimously to maintain the base rate at 0.75 per cent at its latest meeting (Thursday 1st November). The next MPC meeting is scheduled for 20th December 2018.
The base rate was last increased in August 2018 when the Bank upped it from 0.5 per cent to its current 0.75 per cent. August’s increase was only the second increase in the last decade following the decision in November 2017 to increase it from the historic low of 0.25 per cent to 0.5 per cent.
Borrowers might be reassured to hear the Bank say that “any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent”. However, the UK’s overall economic outlook and where things go next is currently highly dependent on the results of Brexit.
There is a particular emphasis on new trading agreements and the smoothness of the transition, all of which is predicted to impact the UK’s financial, business and household markets.
Mark Carney, governor of the Bank of England, has warned that a ‘no-deal’ Brexit would be particularly problematic, potentially resulting in a sharp fall in the country’s economic output and leaving both individuals and businesses faced with a very real prospect of significantly higher borrowing costs.
While there have been various comments, the Bank’s official status at this stage is rather non-committal as Mr Carney said: “Since the nature of EU withdrawal is not known at present, and its impact on the balance of demand, supply and the exchange rate cannot be determined in advance, the monetary policy response will not be automatic and could be in either direction.”
It’s a case of watch this space.