Bank of England holds interest rates ahead of snap election

Bank of England holds interest rates ahead of snap election

Bank of England

Justin Tallis | AFP | Getty Images

The Bank of England (BOE) held interest rates steady on Thursday, opting not to adjust borrowing costs in the world’s fifth-largest economy ahead of a snap election.

With 35 days to go before Britons head to the ballot box, the BOE’s nine-member Monetary Policy Committee (MPC), led by Mark Carney, voted to hold interest rates at 0.75%.

Sterling traded at $1.2855 shortly after the announcement, little changed from the previous session.

Much has changed in British politics since the MPC last voted to leave interest rates unchanged in mid-September.

Prime Minister Boris Johnson ultimately failed to rush his Brexit deal through Parliament, prompting the Conservative Party leader to request a Brexit extension and call a snap vote for December 12.

The EU agreed to push back the Brexit deadline until the end of January, with an earlier departure possible should U.K. lawmakers ratify their divorce deal.

Economists believe the BOE will cut interest rates at some point next year, amid a slowing economy and Brexit uncertainty.

Market expectations for a quarter-point rate cut in 2020 stand at roughly 55%, according to the CME BOE Watch Tool.

A long-running U.S.-China trade war and a global economic downturn have prompted the Federal Reserve and European Central Bank to cut interest rates in recent months, but, so far, the BOE has resisted following suit.

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