Bank of England looks at Brexit for dropping pound

17 March 2016

money The Brexit is causing all manner of arguments between people, where people can't talk calmly about it, which is about as useful as a barbed wire condom. Either way, the Bank of England are feeling everyone's jumpiness about it, and have kept the UK base interest rate at 0.5%, even though there's been a drop in the value of sterling, which is linked to the EU referendum.

The BoE's monetary policy committee (MPC) have also unanimously voted to keep their quantitative easing asset purchase scheme on hold at £375bn. This decision means that the UK is in the middle of its eighth year of historic low interest rates.

The MPC have said that the 10% drop in sterling is thanks to the Brexit uncertainty, and the build-up to the referendum vote in June.

"There appears to be increased uncertainty surrounding the forthcoming referendum on UK membership of the European Union. That uncertainty is likely to have been a significant driver of the decline in sterling," said the MPC.

They added: "It may also delay some spending decisions and depress growth in aggregate demand in the near term. Overall, however, the committee judges that the outlook for domestic activity to be little changed from the time of the February inflation report."

The MPC also believe that wages are going to be going up (toward 3.5% to 4%) as inflation goes toward the 2% target.

TOPICS:   Banking   Investments

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