The Bank of England opted to hold the benchmark interest rate at 0.75 percent, moving in line with expectations, with a unanimous 9-0 vote from the monetary policy committee members. The BOE also left the amount of asset purchases unchanged at $435 billion pounds.
BOE minutes showed that policymakers have warned that uncertainty over Brexit has weakened U.K. growth, citing the vulnerable business investment.
However, the central bank raised its growth forecasts for the current quarter, following the contraction recorded in the April-June period.
“Brexit-related developments are making UK economic data more volatile, with GDP falling by 0.2% in 2019 Q2 and now expected to rise by 0.2% in Q3,” the BOE said.
“The longer those (Brexit) uncertainties persist, particularly in an environment of weaker global growth, the more likely it is that excess supply will increase. In such an eventuality, domestically generated inflationary pressures would be reduced,” the BOE warned.
In addition, the BOE warned that the trade war between the U.S. and China has intensified and the outlook for the global economy has weakened.
As of 11:16 GMT, the British pound traded lower at $1.2446, set for its
second straight daily decline.