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Base rate decision “on a knife edge”

Bank of England

The outcome of this Thursday’s base rate decision is “on a knife-edge”, after two in nine Monetary Policy Committee members voted for a cut back in December.

That was the view of Neil Shearing, group chief economist of Capital Economics, though the economic consultancy predicted that the MPC will “probably” resist pressure to cut interest rates.

Shearing explained that last week’s news that housing market activity is on the up should be enough to prevent a rate cut.

Regarding Brexit, he said uncertainty would hang over the UK for at least a year, until negotiations with Brussels have concluded.

However he speculated that it could go on even longer, with the UK signing a “phase one” deal covering the basic elements of goods trade with the EU by the end of this year – and with issues like services trade, market access and financial services kicked down the road.