Any decision to lower interest rates would have been a preemptive move since we still have no hard economic data from the post-referendum period, says Michael Henderson, lead economist at risk consultancy Verisk Maplecroft. “The BoE seems to have decided that the advantages of an interest cut, in terms of supporting domestic demand, were outweighed by the negative implications of a weaker pound and stronger inflationary pressures,” he adds.
That said, looser monetary policy isn’t off the table. Rather, policymakers will first look for concrete signs of a market economic slowdown in the incoming data before taking affirmative action, Mr. Henderson says.
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