The Bank of England has kept interest rates on hold amid continued uncertainty over Brexit.
All nine members of the Bank’s Monetary Policy Committee (MPC) voted to keep rates at 0.75%, where they have been since August last year.
In the meeting’s minutes, the MPC said the economic outlook would continue to depend “significantly on the nature and timing of EU withdrawal”.
The MPC’s response in terms of interest rates could be “in either direction”.
In setting interest rates the Bank is aiming to keep inflation within 1% either side of its target of 2%.
The Bank said that predictions contained in its February inflation report were conditional on a “smooth adjustment to the average of a range of possible outcomes for the UK’s eventual trading relationship with the EU”.
“The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.”
The Bank also found that the “cumulative effect of Brexit uncertainties” had hit investment by companies.
Its data suggested that the level of “nominal investment” may be between 6-14% lower than would have been the case in the absence of Brexit uncertainties, with larger items such as machinery, equipment and buildings singled out in particular.
There was also further evidence that companies were continuing to stockpile, the Bank said, though the signs were that imports had risen strongly recently, so a lot of the goods were coming from overseas.
According to the findings of a special survey carried out by the Bank’s agents, about 80% of firms thought they were ready for a no-deal, no-transition Brexit scenario, against about 50% in January.
However, “companies had continued to report significantly weaker expectations of output, employment and investment in the event of a no-deal, no transition Brexit”.