John Hawksworth, chief economist at PwC, comments on the latest Bank Rate decision:
"As anticipated, the MPC voted unanimously to keep interest rates on hold for now. We would expect the MPC to continue to adopt this 'wait and see' approach until the immediate uncertainties around Brexit are resolved.
"The MPC also revised down its central projection for UK GDP growth in 2019 from 1.7% in November to 1.2% now, reflecting heightened uncertainties around Brexit and recent evidence of slower global growth, notably in the Eurozone. Assuming a reasonably smooth Brexit, they then project a gradual pick-up in UK growth to around 1.5% in 2020 and 1.9% in 2021 and suggest that this would be consistent with a very gradual rise in interest rates over this period, perhaps by around 25 basis points per year on average.
"As indicated in past Bank of England research, however, a disorderly 'no deal' Brexit could lead to a sharp fall in UK GDP in the short term, though quantifying the scale of any such downturn is very difficult given that this would be a historically unprecedented scenario. In this case, we would expect both monetary and fiscal policy to be relaxed in the short term to try to mitigate the negative impact on the economy to some degree. Businesses would be well advised to continue with their contingency planning for a no deal Brexit until a deal is agreed in Parliament and with the EU."
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