Investing.com - The Bank of England left its key interest rate unchanged as expected, as its policy-making committee voted unanimously against changing monetary policy as the U.K. grapples with how and when it will leave the European Union.
While many U.K. data continue to show signs of strength, the Bank remains reluctant to raise interest rates while the risk of a disorderly Brexit remains. Prime Minister Theresa May will ask for a three-month extension of the U.K.’s plans to leave the European Union at today's EU summit but whether or not the EU will grant an extension remains to be seen.
"The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond," the Bank said in its statement.
Looking through the Brexit uncertainty, the Bank indicated an ongoing bias to tightening policy “at a gradual pace and to a limited extent," while admitting that its response to Brexit “could be in either direction”.
Recent data have shown inflation still below the BoE target rate, although the consumer price index rose unexpectedly in February to 1.9%.
Retail sales released earlier on Thursday also showed a surprise advance in February.
U.K. jobs data released earlier this week showed job creation was at its strongest since 2015 in January. The data also confirmed that wages rose at their fastest pace since the financial crisis.