Will Brexit affect interest rates and inflation?
The UK’s main interest rate is set to stay at its record low of 0.25 per cent after the Bank of England voted unanimously to keep it that way.
The next rate move could go in either direction. The last change was a rate cut in August due to the UK’s decision to leave the European Union.
The Bank has since predicted a “slightly lower path”, however it’s still expected to over shoot the two per cent target next year.
Since the decision, the pound has fallen even lower, below $1.25.
The Bank has also voted to make no changes to its bond buying programme, this was created to help stimulate the UK economy after the EU referendum.
The Bank will continue to buy and hold £435bn of UK government bonds and £10bn of corporate debt.
The Bank of England said: “All else equal, this would result in a slightly lower path for inflation than envisaged in the November Inflation Report, though it is still likely to overshoot the target later in 2017 and through 2018,”
“The global outlook has become more fragile, with risks in China, the euro area and some emerging markets, and an increase in policy uncertainty.”
The Bank notes that the UK’s economy is still growing steady, however it warned of potential trouble further down the line.