The Bank of England’s (BoE) Monetary Policy Committee (MPC) voted unanimously to maintain bank rate at 0.75 per cent in its latest meeting.

Commenting on the announcement, Quilter Investors portfolio manager Hinesh Patel said: “Given the tone of today’s announcement, we must question whether the MPC may have considered cutting rates now had the value of the Pound not already dropped substantially in recent weeks. The US Federal Reserve yesterday took steps to address pressure on the other side of the Atlantic.

“The same might have been true in the UK had the new Prime Minister’s stance on no deal not already thrown a dampener on Sterling.”

Patel added that the recent decision from the MPC is a “fairly benign update”, highlighting that those in the industry did not expect a change.

According to Patel, the “crucial thing” is how the UK central bank is preparing for what lies ahead of the autumn.

Sanlam UK chief investment officer Phil Smeaton added that, despite the Tories having seen a “Boris bounce” in the polls, uncertainty “continues to plague” the UK economy. He noted that global headwinds remain a significant challenge and while the Brexit outcome is still unresolved, “fears of a substantial downturn are gathering pace”.

“A decision to cut rates is not without risk as inflationary pressures remain substantial. Not only is wage growth at its highest rate since 2008, but Sterling is weaker now than during the financial crash as fears grow about the prospect of a ’no deal’ exit from the EU.”

Smeaton highlighted the probability of an interest rate cut this year, stating: “Carney continues to keep his powder dry, hoping for a surer footing. But a cut by the end of the year looks almost certain.”

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