British central bank leaves interest rates alone amid Brexit volatility

The Bank of England on Thursday voted to hold interest rates steady, and warned that prolonged instability over Britain’s planned departure from the European Union will significantly harm the domestic economy.

The bank warned of economic harm if uncertainty surrounding Britain’s EU exit continue unabated. File Photo by Andy Rain

The central bank’s nine-member Monetary Policy Committee voted unanimously to keep interest rates at 0.75 percent.

The bank noted several factors that went into its decision, including the ongoing trade conflict between the United States and China.

“Since the MPC’s previous meeting, the trade war between the United States and China has intensified, and the outlook for global growth has weakened,” the Bank of England said in a statement. “Brexit-related developments are making U.K. economic data more volatile.”

The fiscal concerns are fueled by the months-long uncertainty surrounding Britain’s planned EU exit. There is still no trade agreement between London and the EU, and Prime Minister Boris Johnson has repeatedly promised to complete the withdrawal by Nov. 1, no matter what.

The bank said Thursday British inflation fell in August to its lowest level in three years, to 1.7 percent — a decline from 2.1 percent In July.

The Bank of England’s decision came one day after the U.S. central bank voted for the second consecutive time to cut benchmark rates. The Bank of Japan also left interest rates alone on Thursday, while the European Central Bank cut its main deposit rate by 10 basis points to -0.5 percent, a record low.

ByNicholas Sakelaris