LONDON (AP) – The growth outlook for the British economy has deteriorated largely as a result of a gloomier global backdrop, the Bank of England said Thursday as it refrained from cutting rates in the run-up to a general election that could have huge repercussions on Brexit.
Though waning fears of a no-deal Brexit should help cushion growth in the near-term, the bank said the British economy will grow by around 1 per cent less over the coming three years than it forecast just three months ago.
That’s primarily due to a weaker global economy in the wake of the ongoing U.S.-China trade spat.
For two of the Bank’s nine rate-setters on the Monetary Policy Committee, the deteriorating outlook was enough for them to back an immediate rate cut. The majority, though, opted to keep the Bank’s main interest rate on hold at 0.75 per cent. That’s the first time there’s been a split on the committee since June 2018.
Bank of England Governor Mark Carney, who is due to step down at the end of January, conceded that a rate cut soon was possible.
“If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation,” he said.