Interest rate held

Bank ‘ready to intervene’ if Brexit talks fail

Bank of England

Bank of England: monitoring risks (pic: Terry Murden)

The Bank of England’s monetary policy committee voted unanimously to leave the interest rate unchanged at 0.1%, but said it stood ready to intervene in the event of a No Deal Brexit.

It said that leaving the EU without a trade agreement would have a greater longer term impact on the economy. The arrival of vaccines to tackle the Covid pandemic reduces risks, it said.

The decision on the bank rate came as the Chancellor said he would deliver his delayed Budget on 3 March.

Rishi Sunak will set out the next phase of the plan to tackle the coronavirus and protect jobs and will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR).

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The Bank, meanwhile, expanded its quantitative easing (QE) programme – which is designed to inject money into the economy and boost lending – by £150bn in November.

The MPC said that if the outlook for inflation weakens, it will “take whatever additional action is necessary”.

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It added that it “does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably”.

Frances Haque, chief economist at Santander, said the  continuation of talks on a trade deal with the EU meant the decision was expected.

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