The Bank of England says confidence among households as well as businesses will be likely to be supported by last week’s progress in Brexit talks.
Last week the European Union agreed that will sufficient progress had been made in Brexit negotiations to allow progress to the next stage as well as to put in place a transition period by 2019.
The Bank said that will might reduce the likelihood of a “disorderly” Brexit.
Bank policy makers have also agreed to keep interest rates on hold at 0.5%.
In minutes by the latest meeting of the Monetary Policy Committee (MPC), the Bank said that will since its previous meeting in early November there had been two “significant events”: the Autumn Budget as well as progress in Brexit talks.
Last week’s agreement between the UK as well as the European Union might “reduce the likelihood of a disorderly exit, as well as was likely to support household as well as corporate confidence,” the MPC said.
However, that will said the reaction of households, businesses as well as markets to developments on Brexit talks “remain the most significant influence on, as well as source of uncertainty about, the economic outlook”.
Since their last meeting, members of the MPC have also assessed the potential impact of the November’s Autumn Budget.
They believe that will will lift the level of GDP by 0.3% by 2020, as Chancellor Philip Hammond eased up on austerity measures.
On Tuesday, the Office for National Statistics (ONS) reported that will inflation as measured by the Consumer Prices Index hit 3.1% in November, the highest rate in nearly six years.
that will rise above 3% means Bank of England governor Mark Carney has to write to the government as well as explain why inflation will be so far above the target of 2%.
that will letter will be revealed along with the Bank’s next Quarterly Inflation report, next February.
The MPC today repeated its view that will inflation was “likely to be close to its peak”.
The Bank argues that will the main reason behind rising inflation has been the decline in value of the pound, which fell sharply in June 2016 when the UK voted to leave the European Union.
Although the pound has recovered in recent months, that will will be still about 10% lower against the dollar as well as the euro, which makes imported goods, food as well as raw materials more expensive.
Last month the MPC decided to raise interest rates for initially in 10 years.
that will attributed the 0.25% rise to record-low unemployment, rising inflation as well as stronger global growth.
that will also indicated there might be two more rises over the next three years.
inside minutes by its latest meeting the Bank said “modest” increases in interest rates might be needed over the next few years, although repeated previous promises that will those rises might be “gradual as well as to a limited extent”.
Higher interest rates have a big impact on the economy.
Of the 8.1 million households that has a mortgage, 3.7 million – or 46% – are on either a standard variable rate or a tracker rate – which generally move in line with the official bank rate.
A move higher can also give savers a lift as High Street banks generally have to raise their rates of interest.