The Bank of England has unanimously voted to hold interest rates at 0.75% amidst fresh uncertainty on Brexit.
The Bank’s Monetary Policy Committee noted that business uncertainty about Brexit is more entrenched, while the risk of a difficult exit from the EU has led to a depreciation in the value of the pound.
In a summary of why it decided to keep rates on hold, the Bank said growth in the UK economy has slowed, inflation is at its 2% target, and future interest rate rises should be gradual and limited in the event of a Brexit deal.
Frances Haque, Santander UK chief economist, said: “With the uncertainty over the outcome of Brexit still hanging in the air and the increased possibility of a no-deal Brexit, the decision to hold rates won’t be a surprise to the market.
“Although the economic data published for the second quarter of this year has been lacklustre, many of the fundamentals such as low unemployment and strong wage growth remain, yet the MPC clearly remains cautious in its approach.
“Until there’s more clarity on the final outcome of Brexit, it’s unlikely we’ll see a rate rise this year, with the market implying that a cut is more likely.”
The Bank will make one more rate decision, to be announced on 19 September, before the Brexit deadline on 31 October.
Danny Belton, head of lender relationships, Legal & General Mortgage Club, said: “There’s no denying we are living through interesting times, so today’s results will come as a relief to borrowers wanting stability.
“The mortgage market remains strong and there are plenty of options available to help borrowers achieve their home ownership goals.
“For borrowers coming to the end of their mortgage term, they could consider locking into a new fixed rate mortgage deal.
“Speaking to an independent mortgage adviser is an excellent place to start and these professionals have extensive knowledge of the market, offering nearly six times the number of mortgages than those available direct from the high street.”