Abu Dhabi, UAEWednesday 28 October 2020

Bank of England keeps interest rate unchanged at 0.75%

It comes as British retail sales slowed to their weakest annual growth rate in almost two years

A view of the Bank of England building in central London as it announces its latest interest rates. AFP / Adrian DENNIS
A view of the Bank of England building in central London as it announces its latest interest rates. AFP / Adrian DENNIS

The Bank of England has held interest rates steady as policy markers exercise caution ahead of the country's departure from the EU at the end of next month.

It is the BoE's first interest rate call since Prime Minister Boris Johnson's landslide election victory one week ago, and ahead of Brexit next month.

The bank has kept its key lending rate at 0.75 per cent.

It comes as speculation mounts over an imminent appointment of the successor to departing Governor Mark Carney.

Mr Johnson will seek to push through Britain's exit from the European Union on January 31 on the same date Mr Carney is due to step down.

The prime minister, whose ruling Conservative Party won the biggest majority since the 1980s heyday of Margaret Thatcher, wants to embrace Brexit and kick-start growth in Britain's stalling economy.

Yet markets remain fearful of a no-deal Brexit after Mr Johnson signalled he will outlaw any extension to a Brexit transition beyond the end of 2020.

Earlier on Thursday, the Office for National Statistics reported that UK retail sales fell by 0.6% month-on-month in November.

Sales have slowed to their weakest annual growth rate since April 2018 as shoppers continued to keep a tight grip on spending amid uncertainty about Brexit and December's election.

Retailers have already reported a mixed start to the Christmas season which is crucial for their profits. Data published last week showed sales growth at Britain's big four supermarkets - Tesco , Sainsbury's , Asda and Morrisons - slowed as shoppers delayed Christmas preparations ahead of the election.

Also on Thursday Norway's central bank left its key interest rate unchanged at 1.5%, as expected, and reiterated that no change was likely anytime soon.

Norges Bank has raised the cost of borrowing four times in the last 15 months.

Their decisions to keep rates on hold contrasts with that of Sweden's Riksbank, which earlier on Thursday raised its benchmark repo rate to zero per cent, ending five years of negative rates.

The BoE's rate announcement came on the same day the bank confirmed it has launched an investigation into claims some investors eavesdropped on press briefings moments before they were broadcast giving a split-second advantage to high-speed traders.

The video feed of the bank's press conferences has a slight delay while the audio feed is live thus enabling those listening in to gain a market advantage before Governor Mark Carney's speeches were made public.

The Times newspaper alleges hedge fund managers were paying between £2,500 and £5,000 per press conference for access to the BoE’s audio feed.

A spokesman for Britain's Financial Conduct Authority regulator says it is "looking at the issue".

Updated: December 19, 2019 05:24 PM

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