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Bank of England's monetary policy committee left interest rates unchanged at 0.25 percent in a unanimous decision today. They also voted 9-0 to keep the Bank's bond-buying programme target at 435 billion pounds and to continue with its new plan to buy up to 10 billion pounds worth of corporate bonds.
Importantly minutes showed that members acknowledged that the economy has fared slightly better than anticipated since the EU referendum. "A number of indicators of near-term economic activity have been somewhat stronger than expected," the Bank said in minutes of the MPC's September meeting.
The Committee now expects less of a slowing in UK GDP growth in the second half of 2016. Central bank staff estimated the economy would grow by 0.3 percent in the July-September period, better than their previous forecast of a slow crawl of just 0.1 percent made in August. Even at 0.3 percent UK Q3 GDP growth would be a half from the second quarter's pace and the BoE reiterated it could well cut its benchmark lending rate further soon.
Members expect that the uncertainty caused by the vote would drag on as UK negotiates its exit from EU. The MPC members noted that surveys since August had shown companies were probably cutting back on business investment, something which would weigh on the economy going forward.
