UK interest rates left unchanged at 0.25%

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Economic indicators suggest the UK economy has shrugged off the referendum result so far

The Bank of England has left its main interest rate at 0.25% but says another cut is still a possibility.

The decision of the Monetary Policy Committee (MPC) to leave rates at their new, historically low, level was no surprise.

Last month the Bank halved its bank rate from 0.5% as it tried to ensure the stability of the UK's banking system in the aftermath of the June Brexit referendum vote.

That was the first rate cut since 2009.

But the Bank said again that it might cut rates further in the coming months, even though the immediate economic after-shock of the Brexit vote now appears to be weaker than first thought.

"A number of indicators of near-term economic activity have been somewhat stronger than expected," the Bank said in the minutes of its latest MPC meeting.

It added that if its economic forecasts in November were similar to those it had formulated in August, then "a majority of members expected to support a further cut in bank rate to its effective lower bound at one of the MPC's forthcoming meetings during the course of the year."

The Bank noted that a variety of economic indicators have suggested that the UK economy has shrugged off the post-referendum surprise in the short-term.

As a result, the Bank is not as gloomy about the short-term state of the economy as it was a month ago.

But it said that it still expects the pace of economic activity in the July-September period to have halved from the growth rate recorded earlier in the year.

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Analysis: Kamal Ahmed, BBC economics editor

The Bank's internal judgement is that growth in Q3 (that's July to September) will now be between 0.2% and 0.3%, a pretty chunky upgrade on its August forecast of 0.1%.

It's not an official forecast, but given the Q3 growth figure will be announced before the next meeting of the MPC in November, it is as close as we are going to get.

Looking at 2017, the MPC says it is harder to make a judgement, but if the present economic momentum continues, then expect an upgrade in growth forecasts for next year and 2018 after brutal downgrades last month.

It still says that is considering cutting interest rates again - to 0.1% - but the chances of that must be lower given the better economic news.


Under a new timetable which replaces the long-standing practice of monthly meetings, the next MPC meeting will take place in November.

It is at that point that some City economists expect a further cut in bank rate to just 0.1%.

The latest vote of MPC members, who include the governor Mark Carney, was unanimous - at 9-0.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: "The Bank of England's decision to keep interest rates on hold was unsurprising.

"Although the post-referendum economic data has been decidedly mixed, we expect growth to slow sharply in 2017.

"We anticipate the MPC will move again to cut interest rates before the end of the year," he added.

The MPC also voted to stick with the expansion of its quantitative easing (QE) policy, which it announced in August.

That means the bank will now buy an extra £60bn of government bonds - taking the total to £435bn - along with a further £10bn of corporate bonds, as part of its continuing attempts to keep the economy from sliding into recession.