BOE keeps powder dry as Brexit moves to next stage

Bloomberg

The Bank of England (BOE) signalled it will focus on the next phase of Brexit negotiations as two policy makers continued to push for an immediate interest-rate cut.
Officials said it was too early to tell whether the clearer path for the UK’s departure from European Union (EU) on the back of Boris Johnson’s election win will improve sentiment. They repeated that monetary policy may need to add stimulus if Brexit uncertainty remains entrenched or global growth failed to stabilise.
“It was possible that household and business sentiment could pick up in the near term,” the bank said in minutes of its December meeting. “Further out, the responses of companies and households would depend on developments in the next stage of the Brexit process, including negotiations about the nature of, and the transition to, the UK’s future trading relationships.”
The bank’s Monetary Policy Committee, led by Governor Mark Carney, voted 7-2 to hold rates at 0.75%. Michael Saunders and Jonathan Haskel maintained their push for an immediate cut, saying that with little room for looser policy, “risk management considerations favoured a prompt response to downside risks.”
The BOE cut its projection for fourth-quarter growth to 0.1% from 0.2% and said it still expects inflation to slow to around 1.25% in the spring, well below the 2% target. It also noted that the labor market might be loosening, though it remains tight.
Still, officials expect inflation and growth to pick up over the next few years, and repeated that if that forecast materialises, a series of limited and gradual rate hikes will be needed. It will revisit its forecasts next month.