The Bank of England has unsurprisingly voted unanimously to keep interest rate 0.25 per cent at today’s meeting.
The decision comes a day after the US Federal Reserve raised its interest rate by 0.25 percentage points to a range of 0.5 to 0.75 per cent, amid a stronger economic outlook and rising employment.
The BoE cut its main interest rate by 25 basis points in August after the UK voted to leave the European Union. It was the first cut since 2009.
In its notes the central bank suggested the forward-looking components of business surveys are weaker than those for current output levels, suggesting an economic slowdown in 2017.
Royal London Asset Management economist Ian Kernohan says: “The MPC will remain sensitive to any slowdown in economic activity next year, with real income growth squeezed by rising inflation and Brexit uncertainty impacting corporate investment plans.
“In my view, the balance of probability still favours another small rate reduction next year, and with the Fed hiking rates, this will continue to put downward pressure on sterling against the dollar.”
Momentum UK director of consumer strategy Dominic Baliszewski adds the lack of action from the Bank of England “has piled more pain onto savers”.
He says: “Low interest rates combined with rising inflation will make saving money even less attractive, particularly during this festive time of year when many will choose to spend rather than save for a rainy day.
“Yet again, it’s consumers who will bear the brunt as banks continue to slash rates on savings products. Brits will now need to be savvier than ever if they want to make their money go further – anyone looking for a good earning rate on their money might want to look outside of traditional savings products for a solid return.”