It came as a surprise for market makers: the Bank of England left borrowing costs at 0.5% on Thursday in spite of the Brexit fears. Also, the central bank will keep the size of the Asset Purchase Programme at £375 billion and hinted it could launch a stimulus package in August.
“Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence.”
“Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term.”
Only one MPC member voted for a 0.25% rate cut. The other eight members voted to leave borrowing costs on hold until August.