The Bank of England said it’s less confident than usual about the outlook for the economy because of Brexit and offered little new insight into the impact of no deal.

The comments are the first from the bank since Boris Johnson became prime minster on a mission to leave the European Union on Oct. 31 with or without new trading arrangements in place. If there’s no deal, the BOE merely noted again that the pound will fall, inflation will accelerate and growth will slow.

In its new forecasts Thursday, it specifically excluded the possibility of no deal. It assumes a smooth Brexit and reiterated that interest rates will need to gradually rise to bring inflation to target.

While that means Governor Mark Carney avoids a political headache, it will disappoint others who are looking for more clues as to how the BOE might respond to no deal.

That communications problem has dogged the governor for some time. To account for the market currently pricing in a rate cut because of the greater chance of a bumpy departure from the EU, it gave some stylized forecasts based on higher pound and interest rates. They show much slower inflation than the central scenario.

“The increased uncertainty about the nature of EU withdrawal meant that the economy could follow a wide range of paths over coming years,” the BOE said. “The appropriate path of monetary policy would depend on the balance of the effects of Brexit on demand, supply and exchange rate.”

The bank’s rate-setting committee voted unanimously to hold the key rate at 0.75% and to keep asset purchases unchanged.

As Brexit keeps the BOE in wait-and-see mode, the world’s biggest central banks are turning dovish as global growth cools and trade tensions persist. The Federal Reserve on Wednesday delivered a quarter-point cut and suggested there’s more to come. The European Central Bank is looking at adding more stimulus as early as September.

Investors expect the next BOE move to be a cut rather than a hike.

Acknowledging the weaker global backdrop, the BOE lowered its forecast for economic growth this year, sees slower export growth and weak business investment persisting into 2020.

In the stylized forecasts, one quarter-point rate hike over the next three years brings inflation below the 2% target.

That compares with a central forecast, based on the market’s expectation of a quarter-point cut, for inflation to pick up to 2.4%. The forecast also sees excess demand at a whopping 1.75%.

In normal circumstances, that would imply that the BOE should be raising rates soon. But given the uncertainty around Brexit, all nine policy makers deemed the current stance appropriate.

Source : Bloomberg