Furthermore, the central bank warned that the global slowdown was pulling down Britain’s economy and the negative effects started sooner than expected.
Brexit Fallout
In response to the weakness, the BOE decided to hold rates at 0.75% as expected. Central bank officials have stated that interest rates could move in either direction after Brexit based on the country’s ability to avoid any fallout from the Brexit.
“The general message remains largely the same: they would prefer to be tightening sooner rather than later, but Brexit is going to stop them doing that for quite some time,” James Smith, an economist with ING bank, told Reuters.
A piece of good news was that inflation could remain below target, with headline rate consumer price inflation at around 1.75% in January, due to the drop in crude oil prices.
Furthermore, the BOE said tax and spending measures announced back in October could also modestly bolster the economy by around 0.3 percentage points over the next few years.
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