Bank holds rates at 0.1% amid eleventh hour Brexit deal talks

The Bank of England has kept rates on hold at 0.1% as the UK remains locked in eleventh hour talks to break the Brexit deal deadlock.

The nine-strong Monetary Policy Committee (MPC) voted unanimously for a no-change decision at its final meeting of the year, while it also kept the Bank’s quantitative easing (QE) programme at £895 billion.

The Bank said it expects a less severe contraction in the UK economy of just over 1% in the fourth quarter as the economy has shown resilience despite the second lockdown in England.

It added the rollout of the Covid-19 vaccine gave hope for 2021, but stressed over the uncertainty also caused by the year-end Brexit deadline.

In minutes of the decision, the Bank said: “The outlook for the economy remains unusually uncertain.

“It depends on the evolution of the pandemic and measures taken to protect public health, as well as the nature of, and transition to, the new trading arrangements between the European Union and the United Kingdom.”

It added the vaccine developments are “likely to reduce the downside risks to the economic outlook”.

“Nevertheless, recent global activity has been affected by the increase in Covid cases and associated reimposition of restrictions,” the Bank said.