The Bank of England left monetary policy unchanged in December, as had been widely expected.
After raising interest rates for the first time in more than a decade in November, the Old Lady of Threadneedle Street was always set for a quiet month, and that proved so, with the bank leaving interest rates unchanged at 0.5%.
At its November meeting, the bank hinted that the path of interest rates could steepen somewhat in the coming year or so, signalling the potential for another rate hike in early 2018, and possibly even another towards the end of the year, should the economy remain reasonably robust. That view was maintained in December. Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent.
The bank made clear that Brexit remains the most important influence on the British economy right now, saying that: Developments regarding the United Kingdom’s withdrawal from the European Union – and in particular the reaction of households, businesses and asset prices to them – remain the most significant influence on, and source of uncertainty about, the economic outlook.
With inflation still rising thanks to the depreciation of the pound since the vote to leave the EU last summer, the bank faces a key trade-off, balancing that inflation with the slowdown in the economy, dwindling consumer spending and declining inward investment.
If you are an expat with a mortgaged property in the UK this could affect you in 2018. As a new year’s resolution, you could be well advised to review your current mortgage deal with a view to securing a longer-term fixed deal. These are without doubt uncertain times so reviewing your longer-term plans cannot be a bad idea.
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