Bank of England keeps interest rate at 0.75%

Bloomberg  Bank of England  Flickr CC BY-ND 2.0

"It is this outlook for inflation, alongside our assumptions of a Brexit deal/transition arrangements being agreed, that leads us to conclude that the BoE will remain of the view that normalisation in policy (rather than further easing) will be the next step for the MPC", George Buckley, Nomura's chief United Kingdom & euro area economist, wrote in a note to clients.

Sterling and British government bond yields fell slightly after the policy statement, which potentially opens the door to a rate cut if Brexit uncertainty becomes chronic or the global economy takes a sharp downturn. "And even though the tone of the minutes was slightly more dovish than in August, we do not expect the MPC to follow in the footsteps of the Fed and the European Central Bank and loosen policy unless there is a no deal Brexit".

Admittedly, the perceived risk of "no deal" appears to have decreased over the past couple of weeks following Parliament's legislative efforts to force a further delay to the Brexit process.

There was a likelihood that global growth would remain weaker, reducing the UK's exports and GDP growth in coming months.

If Britain leaves without a deal, rates might need to move up or down, depending on the inflationary shock of any slump in sterling, the BOE said, though Governor Mark Carney has said he personally believes a rate cut is more likely to be needed.

"The fiscal risk is of course the currency risk associated with fiscal policy being seen to do much worse in South Africa", said Gina Schoeman, an economist at Citigroup South Africa.

The minutes are the strongest clue yet as to how policy makers are bracing for extensions to the Brexit deadline.

Analysts cite continued uncertainty around the outcome on Brexit as the main factor tying the Bank of England's hands on rates. Indeed, we think that the MPC would hold fire until the second half of next year.

The Bank of England in London, Britain. Johnson says he won't do that, further stoking uncertainty over Brexit.

The pound fell against both the euro (GBPEUR=X) and the dollar (GBPUSD=X) when the data was published, as investors bet the below-target reading meant the Bank of England was nearly guaranteed not to raise rates on Thursday.

"Bank of England inaction on interest rates would be in marked contrast to the loosening cycle in monetary policy increasingly being adopted by global central banks, the latest example being the substantial stimulus measures announce by the European Central Bank on 12 September. A cut in the interest rate would assist, especially since business confidence is at its lowest point in 20 years".



Latest news

Damage at Saudi oil facilities revealed after airstrikes
Trump in June authorized a military strike after Iran shot down a United States drone, only to call it off at the last moment. Saudi officials brought journalists Friday to see the damage done in an attack the USA alleges Iran carried out.

Raiders Among Six Teams Pushing Hardest for Jalen Ramsey
Ramsey will play on Thursday night against the Titans, but as Anderson reported, he doesn't expect to be with the team in Week 4. One thing Ramsey did address was how the trade request got out into the media, which he emphasized he was not responsible for.

'Some progress made' as UAW-GM negotiations continue amid strike
He said that includes about 2,500 workers at GM's Oshawa Assembly plant and 2,000 people who work for GM's suppliers. Catharines, Ont., and its CAMI assembly plant in Ingersoll, Ont., which makes sport utility vehicles.

Trump to meet with Ukraine president at United Nations next week
They allege that Mr Trump and Mr Giuliani tried to pressure the Ukrainian government into investigating Joe and Hunter Biden . The president's personal lawyer has been pressing Ukraine to investigate Joe Biden and son Hunter Biden for corruption.

Facebook To Create Panel That Can Even Overrule Mark Zuckerberg
Facebook gave details on the structure of the oversight board and its relationship to Facebook in the form of a charter. The constitution, a nine-page doc, units guidelines for the brand new panel of as much as 40 members.

Other news