Responding to the Bank of England’s decision today to keep interest rates on hold at 0.5%, Michael Martins, Economist at the Institute of Directors, said:
“The Bank of England is playing wait and see for the moment. While the Governor has been clear since the Brexit vote that he is poised to act if necessary, it looks like they are waiting to get more data on what is happening in the real economy before making a decision. Next week’s official data releases on the public sector finances, inflation, and labour market, which collectively cover the time immediately before and after the referendum, should help them make up their minds before next month’s meeting of the Monetary Policy Committee.”
The minutes of the MPC meeting refer to “preliminary signs that the result has affected sentiment among households and companies, with “indications from surveys…that some businesses are beginning to delay investment projects and postpone recruitment decisions.” One of the first surveys was conducted by the IoD immediately after the vote, which showed that a third of members (32%) say hiring will continue at the same pace, but a quarter (24%) will put a freeze on recruitment, and 5% will make redundancies - first signs brexit will hit jobs.