LONDON—The Bank of England surprised financial markets by opting against a cut in interest rates on Thursday, despite clear evidence of the initial economic damage caused by the country’s vote last month to leave the European Union.
The bank said it was too soon to know the full impact of the Brexit vote — even though the housing market already shows signs of struggling and business confidence has plummeted. However, it did signal that it could cut rates at its meeting in early August after receiving additional data on how the economy is faring in the wake of the June 23 referendum.
The recently battered British pound, which fell to a 31-year low against the dollar in the aftermath of the vote, rallied following the bank’s announcement. The pound was up 1.4 percent at $1.3308 and 1.5 percent firmer at 1.20 euros.
Bank of England Gov. Mark Carney and seven other policymakers at the central bank chose to keep policy on hold on Thursday, including maintaining the benchmark rate — so-called Bank Rate — at 0.5 percent. Only Gertjan Vlieghe voted to reduce it a quarter of a percentage point to 0.25 percent.
