Bank of England has 'licence to wade back into EU debate'


The Bank of England could wade back into the Brexit debate today when it announces its latest interest rates decision just a week before Britain's EU referendum.

Governor Mark Carney said recently the rate-setting Monetary Policy Committee (MPC) will not hold back from flagging issues, such as the referendum, which could hamper attempts to hit its inflation target.

He has already sounded the alarm over a British exit, saying it could tip the UK into recession and all eyes will be on minutes of the MPC meeting for further warnings.

Analyst Chris Hare, of Investec, said the Bank will have licence to wade back into the EU debate.

He said: "The Bank of England entered a 'purdah' period from May 28, whose rules forbid civil servants from publishing material relating to the 23 June vote.

"But the Bank does not comprise civil servants and it only follows purdah arrangements on a self-imposed basis, with certain exceptions. The most notable exception, flagged by governor Mark Carney in front of the Treasury Select Committee last month, is the June 16 MPC meeting."

The Bank is expected to vote unanimously to keep rates on hold at 0.5% where they have been since March 2009.

A rate rise now seems firmly off the cards for 2016 at least, and speculation is mounting over the possibility of a rate cut should Britons vote to leave the EU.

Shaun Port, chief investment officer at online investment management firm Nutmeg, said there was currently a 50% chance of a rate cut this year.

"We expect this to shift to 100% in the event of a Leave vote," he added.