International Finance

Bank of England keeps interest rate unchanged

Makes no change to its bond buying programme

December 16, 2016: The Bank of England has kept the UK’s interest rate at a record low of 0.25%.

It said that the next rate move could be in either direction. The last change was a rate cut in August, in the wake of the UK’s vote to leave the EU.

The bank foresees a slightly lower path for inflation, although it is still expected to overshoot the 2% target next year.

The bank also voted to make no change to its bond buying programme, created to stimulate the UK economy after the referendum, which means it will continue to buy and hold £435bn of UK government bonds and £10bn of corporate debt.

The bank predicts improvement in the inflation forecast after seeing the value of the pound and the oil price rise.

“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 bank said. “The global outlook has become more fragile, with risks in China, the euro area and some emerging markets, and an increase in policy uncertainty.”

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