What's going on?

On the same day that another set of better-than-expected UK economic data was released, Britain�s central bank met but made no changes to its main policies (following major policies�announced in August that were aimed at boosting the economy).

What does this mean?

British shoppers bought only slightly fewer things in August relative to July. That was taken as good news because July was a particularly strong month. In other words, almost keeping up with July�s pace was viewed as a positive.


Separately, the Bank of England (BoE) said it still expects the UK economy to weaken following the Brexit vote (tweet this). If that happens, the BoE says it will likely cut interest rates further in the hopes of giving the economy more of a boost.

Why should I care?

For markets: Low interest rates can hurt some companies.
Many companies (especially in the UK) maintain pension funds on behalf of their employees whereby the employees are entitled to a fixed amount of money each year once they retire. The companies put money into investments (typically bonds) to pay for this future cost. But with interest rates so low, the bonds don�t offer much of a payback and, thus, the pension funds are more likely to be underfunded. Companies typically need to make up this shortfall by contributing money from their profits � which means there�s less leftover for shareholders (a.k.a. investors).


The bigger picture: The government is going to get out its wallet…
The UK government is expected to announce a big spending package at the end of November. The idea will likely be to give the economy an immediate boost by funding projects like roads, bridges and, potentially, airports (e.g. �infrastructure�). Britain is doing this to try to counter any economic shock resulting from the Brexit vote, but other countries that are struggling with relatively low growth are increasingly likely to try something similar (e.g. Germany and, possibly, the US after the presidential election).