Bank keeps rates on hold but cut still on cards as growth weakens

The Bank of England has held interest rates at 0.75% but kept the door firmly open to a cut if Brexit uncertainties and global growth fears do not let up.

Minutes of the Bank’s latest decision revealed the Monetary Policy Committee (MPC) voted 7-2 to keep rates unchanged – with Jonathan Haskel and Michael Saunders repeating their calls for a cut to 0.5%.

The Bank slashed its forecast for growth in the fourth quarter to just 0.1%, having previously expected growth of 0.2%, as Brexit uncertainty continues to hamper activity.

Bank of England inflation report and interest rate decision
Bank of England inflation report and interest rate decision

It said that following Prime Minister Boris Johnson’s decisive election victory and expectations that a Brexit deal may now be ratified before the January 31 deadline, “it was possible that household and business sentiment could pick up in the near term”.

Global growth was also showing “tentative” signs of stabilising.

But the Bank added: “If global growth failed to stabilise or if Brexit uncertainties remained entrenched, monetary policy might need to reinforce the expected recovery in UK GDP growth and inflation.”

The rates verdict comes as the Bank remains at the fore of a scandal over the hacking of its audio feed of press conferences after it emerged that hedge funds could have profited by listening in seconds ahead of rivals.

The Bank admitted a back-up communications system it installed a few years ago had been tapped and shared with a market news service, which had allegedly sold access to allow hedge funds to gain advantage over competitors by accessing comments ahead of the broadcast feed.