Bank Of England Leaves Rates, Asset Purchases On Hold Ahead Of Brexit Conclusion

Just like the Fed's announcement yesterday was "substantially" less than some had expected, so the Bank of England unanimously kept its stimulus programme unchanged on Thursday as it awaited the outcome of Britain’s negotiations with the European Union over a post-Brexit trade deal. The BoE left its bond-buying programme at 895 billion pounds ($1.2 trillion), having ramped it up by 150 billion pounds last month.The British central bank also kept its benchmark interest rate at a historic low of 0.1%.

Echoing previous statements, the BoE said that the outlook remains uncertain and depends on pandemic and Brexit, while noting that the vaccine is likely to reduce downside economic risks. The central bank also extended the Term Funding Scheme for small firms by six months to Oct 31, in support of lending to the real economy - according to Bloomberg this is "an acknowledgement that strains in financing could continue well into next year."

And contrary to some expectations, there was no mention of negative rates despite rising chatter in recent months, with Bloomberg adding that the central bank is still examining the operational impact of cutting below zero so that’s a debate for next year, with the committee apparently split between internal and external members on the topic, and that could be a key factor in future decisions.

Here are the highlights from the statement:

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