PwC comments on Bank of England interest rates decision

Nov 07, 2019

PwC chief economist John Hawksworth comments on today's MPC decision:

"As expected, the MPC voted to keep interest rates on hold at 0.75%, but it is notable that two external members of the committee dissented from this view, voting for an immediate rate cut to 0.5%.

"The tone of the MPC minutes is also markedly more dovish than after their previous meeting, with greater concern about both global slowdown and signs that the UK jobs market is beginning to turn. If these trends worsen over the next few months, the minutes suggest that the majority view might well switch to supporting a rate cut in early 2020.

"On the other hand, the MPC minutes also point to the prospect of a recovery in UK growth later in 2020 and beyond if an orderly Brexit can be achieved, leading to a comprehensive trade deal with the EU. In this case, the committee sees inflationary pressures picking up gradually in the medium term, potentially bringing back the possibility of a gradual rise in interest rates in later years. 

"In the short term at least, it seems the MPC is more concerned about the downside risks to growth and is prepared to pull the trigger on a rate cut if and when these risks materialise."

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