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Economy

Bank of England holds rates steady, downgrades economic growth

The Bank of England's Monetary Policy Committee kept the central bank's main interest rate at 0.75%, in a move money managers said was "cautious" as uncertainty prevails about the U.K.'s exit from the European Union.

The central bank said Thursday that committee members had voted unanimously to leave interest rates unchanged at a meeting Wednesday.

Members of the committee also voted to maintain the stock of corporate and U.K. government bond purchases at the current level. Money managers expect the Bank of England to remain watchful of the Brexit negotiations.

"With the direction of Brexit still unknown, one can forgive the Bank of England for offering little in the way of future policy guidance in today's meeting," said Tim Graf, head of macrostrategy for Europe, the Middle East and Africa at State Street Global Markets, in an emailed comment. "In the face of such extreme and fundamental political uncertainty, we can expect communication from the MPC to remain cautious for at least the next several weeks."

The Bank of England also Thursday cut its gross domestic product forecast for the U.K. economy to the lowest level since the global financial crisis because of uncertainty about the U.K.'s exit date from the European Union on March 29. The forecast was lowered to 1.2% from 1.7% for 2019 and to 1.5% from 1.7% in 2020.

"The Bank of England has downgraded its outlook for U.K. real GDP growth to a pace of growth not seen since just before the global financial crisis," Azad Zangana, senior European economist at Schroders, said in a separate comment. "The bank has blamed slower activity abroad but most of the downgrade is caused by the effects of the heightened level of uncertainty related to Brexit."