Bank of England holds rates, warns another Brexit delay could hurt economic growth

Bank of England holds rates, warns another Brexit delay could hurt economic growth
# 19 September 2019 19:15 (UTC +04:00)

The Bank of England (BOE) held interest rates steady on Thursday, as Brexit uncertainty continues to hang over the world’s fifth-largest economy, APA reports citing CNBC.

With less than 45 days to go before the U.K. is set to leave the European Union, the BOE’s nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to hold interest rates at 0.75%.

Sterling was little changed on the news, trading at around $1.2467.

Policymakers at the BOE reiterated their view that leaving the EU without a deal would slow growth and raise prices.

But, the central bank also warned that another delay to Britain’s departure date could lead to further economic weakness.

“It is possible that political events could lead to a further period of entrenched uncertainty about the nature of, and the transition to, the United Kingdom’s eventual future trading relationship with the European Union,” the bank said in a press release.

“The longer those uncertainties persist, particularly in an environment of weaker global growth, the more likely it is that demand growth will remain below potential, increasing excess supply,”

Prime Minister Boris Johnson has promised to deliver Brexit by October 31 “come what may,” even if that means leaving without a deal in place.

A “no-deal” Brexit is seen by many inside and outside of parliament as a “cliff-edge” scenario to be avoided at all costs.

Leaving without a deal in place would mean an abrupt departure from the EU with no transition period allowing businesses to adjust to life outside the bloc.

U.K. parliament has voted to require Johnson to postpone Brexit if he cannot reach a deal with Brussels soon.

The leaders of France and Finland both agreed on Wednesday that the U.K. has until September 30 to submit written proposals to replace the contentious Irish backstop policy or its relationship with the EU is “over.”

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