Interest rates on hold as MPC sticks with 0.5%

Members of the Bank’s Monetary Policy Committee (MPC) said the economy may face “an extended period of uncertainty”, as it considered the “likely implication for monetary policy” if Britain left the European Union.

The comments came as all nine policymakers on the MPC voted to leave rates at 0.5% - where they have remained since March 2009 - and keep its quantitative easing programme on hold at £375 billion.

Minutes of the meeting showed the MPC also stood by its stance that the next move for rates would be a rise rather than a cut, stating “it is more likely than not that the Bank rate will need to increase over the forecast period”.

The MPC said there was evidence to suggest that uncertainty surrounding the EU referendum decision was already hampering activity.

It said: “There are some signs that uncertainty relating to the EU referendum has begun to weigh on certain areas of activity, as some decisions, including in capital expenditure and commercial property transactions, are being postponed pending the outcome of the vote.”

“This might lead to some softening in growth during the first half of 2016,” the minutes added.

The MPC said a vote for Britain to leave the EU might lead to uncertainty surrounding export growth, while also weighing on demand in the short term.

The comments come after the MPC warned last month that uncertainty over the EU vote could hit the UK economy.