LONDON, May 2 (Xinhua) -- The Bank of England (BoE) kept the interest rate at 0.75 percent Thursday, with raising economic growth forecast for 2019 at 1.5 percent.
Experts and commentators had expected that the central bank would respond with a wait-and-see approach as Britain was still in the period of Brexit uncertainty.
Howard Archer, chief economic adviser to the EY ITEM Club, an economic forecast group in London, told Xinhua: "Clearly Brexit has weighed on the decision to keep interest rates at 0.75 percent."
"Obviously the Bank is uncertain about Brexit and has adopted a wait-and-see approach with what happens to Brexit now that the deadline has been extended and how that will affect the economy," Archer said.
Archer said that the Bank's stance would continue to depend significantly on the nature and timing of withdrawal, in particular the new trading arrangements and whether the transition was abrupt or smooth, and how households, businesses and financial markets responded.
"Past comments by BoE Governor Mark Carney have suggested that he thinks that it is most likely that the economy would need stimulus if there is a no deal Brexit, thereby indicating that an interest rate cut would be more likely than a hike," Archer said.
Archer added that the Bank had issued a warning to markets to price in further rate rises in the future, especially if there is a smooth Brexit where there is less disruption to trade than under a no deal Brexit.
"The message from the BoE is that if there is a smooth transition, then the markets are almost certainly underestimating the extent of monetary tightening that will be needed," said Archer.
"Future interest rises will be 'limited and gradual', according to the Bank, but not as limited and gradual as the markets are currently pricing in," Archer added.
