Monday, 19 November 2018
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
BOE Waits for Brexit Clarity as Forecasts Hint at Faster Hikes
Thursday, 1 November 2018 19:24 WIB | FISCAL & MONETARY |BOE

The Bank of England hinted there may be a need for faster rate increases in the coming years in a report dominated by uncertainty over Brexit.

The Monetary Policy Committee, led by Governor Mark Carney, said the economy may start running hot earlier than previously anticipated as wage growth improves and domestic costs build. It sees the inflation rate staying above its 2 percent goal for the next two years. Interest rates were left unchanged on Thursday.

The slightly hawkish bias compared with August is tempered by the fact that the forecasts are based on an assumption for a smooth Brexit that may not come to pass. It said the exit deal with the EU remains the biggest factor when it comes to the economy and monetary policy.

œThe monetary policy response to Brexit, whatever form takes, will not be automatic and could be in either direction, the bank said in its quarterly Inflation Report. While the exact impact of Brexit œcannot be determined in advance, under all circumstances, the MPC will respond to any material change in the outlook.

In a sign of how Brexit is affecting the economy, the BOE slashed its forecast for business investment and sees stagnation this year. It also lowered its 2019 economic growth outlook slightly, to 1.7 percent. On the global economy, it said growth has become more uneven, and downside risks have increased.

The U.K. predictions, including the outlook for faster inflation, are based on market measures indicating that the BOE will deliver about three more quarter-point rate hikes by late 2021, more than were foreseen a few months ago.

But with its forecasts zero-weighted for a disorderly Brexit, there™s an increasing chance they will ultimately have to be thrown out.

The BOE assumes a relatively stable path for the pound over the next three years, a crucial determinant for inflation. At the same time, it said the currency will probably rise if there™s a Brexit deal that keeps a close relationship with the EU, or drop if the U.K. crashes out without new trade arrangements.

The BOE also noted that the situation is now different from just after the 2016 referendum, when inflation was below target and demand was weaker than supply. At the time, the bank unleashed a new round of stimulus to support growth, but it notes that there™s little it can do to offset supply shocks.

The minutes of the meeting reiterated that limited and gradual rate increases will probably be needed over the next few years. The MPC voted 9-0 at this decision to hold the benchmark interest rate at 0.75 percent, as predicted by all 56 economists in a Bloomberg survey.

Source : Bloomberg

RELATED NEWS
ECB's Draghi raises prospect of slower inflation pick-up amid 'uncertainties'...
Friday, 16 November 2018 16:06 WIB

Presiden Bank Sentral Eropa Mario Draghi pada hari Jumat menegaskan kembali rencana untuk kembali menekan stimulus pada akhir tahun tetapi juga menyuarakan kehati-hatian tentang prospek pertumbuhan, m...

Powell Says He"s Optimistic About Economy as He Notes Concerns From Abroad...
Thursday, 15 November 2018 07:58 WIB

Ketua Federal Reserve Jerome Powell pada Rabu malam melakukan percakapan dengan presiden Dallas Fed untuk mengkomunikasikan optimisme tentang pertumbuhan ekonomi AS bahkan ketika dia mengakui potensi ...

Fed Holds Rates Steady And Stays on Course For More Gradual Hikes...
Friday, 9 November 2018 02:16 WIB

The Federal Reserve pada Kamis mempertahankan suku bunga stabil sementara menandakan bahwa itu akan tetap berjalan dan menaikkan suku bunga pada laju bertahap dalam beberapa bulan mendatang. Seperti ...

RBA Keeps Interest Rates on Hold...
Tuesday, 6 November 2018 10:52 WIB

Reserve Bank of Australia telah merilis suku bunga resmi tidak berubah selama 27 bulan berturut-turut. Rekor terendahnya tingkat suku bunga semalam sebesar 1,5 persen diperkirakan tidak akan disesuai...

BOJ Stands Pat as Risks Rise in Long Battle to Stoke Inflation...
Wednesday, 31 October 2018 10:33 WIB

Bank of Japan membiarkan stimulus moneternya tidak berubah seiring mereka memperbarui perkiraan harga yang mengkonfirmasi bahwa itu tidak akan memenuhi target inflasi untuk tahun-tahun mendatang. Sep...

LATEST NEWS
Oil Near $57 as Russia Wants to Wait and See on Production Cuts

Oil traded near $57 a barrel following six weeks of losses as Russia held off committing to further output curbs, opening up a gap with Saudi Arabia which has called for supply cuts. Futures in New York increased 0.3 percent, paring...

U.S. Futures Slips Lower as Trade Tensions Linger

U.S. futures pointed to a slightly lower open on Monday, as investors continued to monitor developments on trade, after President Donald Trump said he may not impose more tariffs on China. The S&P 500 futures fell 7 points or 0.27% to 2,735.5...

EUR/USD Climbs Further Beyond 1.1400 Handle, 1-1/2 Week Tops

The EUR/USD pair reversed an early dip to sub-1.1400 level and quickly recovered around 25-30 pips from daily lows to hit 1-1/2 week tops in the last hour. The Fed Vice Chairman Richard Clarida offered some dovish comments on Friday, saying that...

POPULAR NEWS
Gold prices settle up by more than 1% for the week; palladium futures log another record
Saturday, 17 November 2018 01:49 WIB

Gold prices climbed Friday to tally a 1.2% gain for the week. U.S. and European benchmark stock indexes declined and the dollar fell for the week,...

Gold Hits 1-Week High as Dollar Softens; Palladium Near Record
Friday, 16 November 2018 19:27 WIB

Gold rose to a one-week high on Friday as the dollar softened following recent gains on uncertainty over Britain's exit from the European Union,...

Stocks End Mostly Higher, But Suffer Weekly Losses on Tech Weakness
Saturday, 17 November 2018 04:12 WIB

Stocks ended mostly higher Friday, finding support after President Donald Trump said China "wants to make a trade deal" with the U.S. But major...

Hong Kong Shares Close Week on Positive Note (Review)
Saturday, 17 November 2018 04:16 WIB

Hong Kong stocks finished the week with gains Friday, tracking a positive lead from Wall Street with energy firms supported by an uptick in oil...