James Knightley, Senior Economist at ING, suggests that the Brexit uncertainty is emphasised by BoE in its yesterday’s meet. Key Quotes “The Bank of England left monetary policy unchanged yesterday, which was widely expected. Bank Rate remains at 0.5% and the size of the Asset Purchase Facility is kept at £375bn. The vote was unanimous in favour of this outcome. The UK’s referendum regarding its membership of the European Union was heavily referenced in the minutes to the meeting (it got 17 mentions versus five mentions in the minutes to the previous meeting). Our house view remains that if the UK votes to stay in the EU we will see delayed hiring and investment plans being implemented in 2H16. Inflation is creeping higher with the steep sell-off in sterling set to push up imported inflation. Then, with the number of job vacancies now exceeding the number of people claiming unemployment benefit we think it is only a matter of time before wages start to push higher, which will add to that medium-term inflation threat. Given the underlying strength of the economy and rising medium-term inflation pressures we still think a November rate hike is possible. However, should the UK vote to leave the next move is likely to be a rate cut as policymakers try to shore up confidence. We expect sterling to fall sharply, which would push up inflation temporarily, but the expected hit to economic activity in an environment where business and consumer sentiment is severely strained suggests that the BoE will “look through” this. Instead, policymakers will focus more on the uncertain prospects for the economy now that its future is in the hands of politicians as the UK looks to secure trade deals that could take many years to negotiate.” For more information, read our latest forex news.