BoE to keep the Bank rate at low levels for some time - Westpac

Analysts at Westpac, point out that November saw the BOE increase the Bank Rate for the first time in ten years.

Key Quotes

“The 25 basis point increase removed the ‘emergency’ stimulus that had been introduced in the wake of last year’s Brexit referendum, and still leaves the Bank Rate at the very accommodative level of 0.50%.”

“With reduced spare capacity, the scope for the BOE to look though the current period of high inflation has diminished. Hence, the reversal of last year’s emergency rate reduction.”

“Nevertheless, given lingering uncertainty around the economic outlook, and the looming downside risks posed by Brexit, we expect that the BOE will keep the Bank rate at low levels for some time yet in order to support demand. However, the risks are tilted towards later rate hikes, rather than sooner.”