BoE likely to stay pat on worries ahead of UK's referendum

The Bank of England is expected to keep rates on hold at its monetary policy meeting scheduled for today, a week before the nation goes for a referendum to determine whether it would quit or stay with the European Union.

The day marks an important event in the history of central banks’ policy meetings.

The central bank of England is expected to leave its interest rate at 0.5 percent, a level constant for over seven years. BoE Governor Mark Carney warned last month that a vote against Britain's membership in the EU could lead to a "technical recession" in the United Kingdom.

The bank’s monetary policy committee will discuss Brexit and other important factors that are likely to affect the country’s economy. These include inflation, at 0.3 percent y/y in May, far below the BoE’s targeted two percent y/y, slowing economic growth that ticked 0.4 percent during the first quarter of 2016, down from 0.6 percent in the last quarter. Growth will further be hit on concerns over Brexit, followed by volatile economic situations.

However, the economy has had some good news as well. The unemployment fell to five percent, as per latest released data. Employment figure touched a record high of 31.6 million. However, average weekly wage growth stood at two percent in the three months ending April.

Several bankers, economists and analysts, including BoE’s Carney, have warned of a further sharp fall in the value of the British currency in case of Brexit, which could push the currency to a 30-year low of below USD 1.3. Pound sterling has lost 3.75 percent against the dollar so far this year and 8.77 percent over the past 12 months.