LONDON — The Bank of England voted to raise rates today for the first time in a decade, from 0.25 percent to 0.5 percent, while also sending a strong signal that any future raises would be slow in coming as Brexit uncertainty continues to weigh down the economy.
BoE also voted to maintain current levels of stimulus.
The vote was with seven members of the committee in favor, with Sir Jon Cunliffe and Sir David Ramsden voting against the increase. The BoE said today said the rate was justified because of strong growth in the global economy, which will bolster net trade, and because domestic consumer confidence is strong, and banks are still willing to give them financing.
However, the bank cautioned that Brexit is having a “noticeable impact on the economic outlook,” and that there “remain considerable risks to the outlook.” All members agreed any future increases would be at a “gradual pace” and “to a limited extent.”
The hike was widely anticipated, after the bank signaled in minutes from their September meeting that a “majority” of members of the Monetary Policy Committee were in favor of a removing stimulus “over the coming months.”
Meanwhile, inflation hit 3 percent in September and unemployment is at a low of 4.3 percent, while GDP growth inched up to 0.4 percent in the third quarter. However, stalled Brexit talks are dragging down business confidence, which prompted business organizations to call for the bank to forgo a rate hike.