The Bank of England pushed interest rates above their financial crisis lows on Thursday, but also signaled it was in no hurry to raise them further as uncertainty about Brexit prevails.
The BoE’s panel were unanimous in their vote to raise rates to 0.75 from 0.50 percent, level at which it has been for most of the past decade apart from 15 months after the 2016 Brexit vote when they were cut 0.25 lower.
While growth had slowed ahead of Britain’s departure from the EU in March 2019, the country’s economy is operating at almost its full capacity, raising the prospect of more home-grown inflation pressure ahead the BoE said.
But the long term message for borrowing costs remained one of gradual and limited increases as the central bank saw inflation only a fraction above its 2 percent target over the next years.
The pound and the FTSE traded lower after the announcement. EUR/GBP fell to over 2-week lows post-BoE announcement.
The EUR/GBP cross extended its retracement from the 0.8900 neighborhood and dropped to a two-week low.