Monday, 23 September 2019
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
BOE Says Brexit Uncertainty Skews Forecasts, Keeps Rate on Hold
Thursday, 1 August 2019 18:26 WIB | FISCAL & MONETARY |BOE

The Bank of England said it™s less confident than usual about the outlook for the economy because of Brexit and offered little new insight into the impact of no deal.

The comments are the first from the bank since Boris Johnson became prime minster on a mission to leave the European Union on Oct. 31 with or without new trading arrangements in place. If there™s no deal, the BOE merely noted again that the pound will fall, inflation will accelerate and growth will slow.

In its new forecasts Thursday, it specifically excluded the possibility of no deal. It assumes a smooth Brexit and reiterated that interest rates will need to gradually rise to bring inflation to target.

While that means Governor Mark Carney avoids a political headache, it will disappoint others who are looking for more clues as to how the BOE might respond to no deal.

That communications problem has dogged the governor for some time. To account for the market currently pricing in a rate cut because of the greater chance of a bumpy departure from the EU, it gave some stylized forecasts based on higher pound and interest rates. They show much slower inflation than the central scenario.

œThe increased uncertainty about the nature of EU withdrawal meant that the economy could follow a wide range of paths over coming years, the BOE said. œThe appropriate path of monetary policy would depend on the balance of the effects of Brexit on demand, supply and exchange rate.

The bank™s rate-setting committee voted unanimously to hold the key rate at 0.75% and to keep asset purchases unchanged.

As Brexit keeps the BOE in wait-and-see mode, the world™s biggest central banks are turning dovish as global growth cools and trade tensions persist. The Federal Reserve on Wednesday delivered a quarter-point cut and suggested there™s more to come. The European Central Bank is looking at adding more stimulus as early as September.

Investors expect the next BOE move to be a cut rather than a hike.

Acknowledging the weaker global backdrop, the BOE lowered its forecast for economic growth this year, sees slower export growth and weak business investment persisting into 2020.

In the stylized forecasts, one quarter-point rate hike over the next three years brings inflation below the 2% target.

That compares with a central forecast, based on the market™s expectation of a quarter-point cut, for inflation to pick up to 2.4%. The forecast also sees excess demand at a whopping 1.75%.

In normal circumstances, that would imply that the BOE should be raising rates soon. But given the uncertainty around Brexit, all nine policy makers deemed the current stance appropriate.

Source : Bloomberg

RELATED NEWS
Draghi speech: We continue to stand ready to adjust all of our instruments...
Monday, 23 September 2019 20:26 WIB

In his introductory statement delivered at the hearing before the Committee on Economic and Monetary Affairs of the European Parliament, European Central Bank (ECB) President Draghi repeated that they...

Bank of England leaves policy rate unchanged at 0.75% as expected...
Thursday, 19 September 2019 18:28 WIB

In a widely expected decision, the Bank of England's Monetary Policy Committee held the policy rate unchanged at 0.75% with a unanimous vote. The asset purchase facility remained steady at €435 bill...

SNB leaves key rate unchanged at -0.75%, USD/CHF eases-off 3-month tops...
Thursday, 19 September 2019 14:54 WIB

At its September quarter monetary policy assessment held this Thursday, the Swiss National Bank (SNB) board members decided to leave the monetary policy settings unchanged. The SNB left the benchmark...

BOJ keeps policy steady, signals chance of easing in October...
Thursday, 19 September 2019 10:47 WIB

The Bank of Japan kept monetary policy steady on Thursday but said it would re-examine economic and price developments more thoroughly at its next policy meeting, signalling the chance of expanding st...

Fed Makes Second Straight Rate Cut, Splits on Further Action...
Thursday, 19 September 2019 01:20 WIB

Federal Reserve policy makers lowered their main interest rate for a second time this year while splitting over the need for further easing, caught between uncertainty over trade and global growth and...

LATEST NEWS
Stock market opens modestly lower to kick off the week as global growth fears weigh

U.S. stock-market indexes began Monday morning trade modestly lower, with investors wringing their hands over signs of weakening global growth and the potential for any international slowdown to weigh on domestic expansion. The Dow Jones...

Gold buoyed as weak eurozone data underlines fears over global growth

Gold rose Monday, finding support after a round of downbeat data out of the eurozone underlined worries about global growth prospects and as traders continued to keep an eye on U.S.-China trade talks. Gold for December delivery on Comex rose...

Draghi speech: We continue to stand ready to adjust all of our instruments

In his introductory statement delivered at the hearing before the Committee on Economic and Monetary Affairs of the European Parliament, European Central Bank (ECB) President Draghi repeated that they continue to stand ready to adjust all of their...

POPULAR NEWS
Gold Futures Score First Weekly Gain in a Month
Saturday, 21 September 2019 01:24 WIB

Gold futures climbed Friday to tally a gain for the week, the first in four weeks, as geopolitical tensions remained high, boosting haven demand for...

Hong Kong Stocks Close Down
Saturday, 21 September 2019 03:33 WIB

Hong Kong stocks ended the week with another loss Friday as investors fret over the impact of weeks of sometimes violent protests on the city's...

Wall Street Falls as Trade Optimism Fizzles
Saturday, 21 September 2019 03:27 WIB

Wall Street dropped on Friday after a Chinese agriculture delegation canceled a planned visit to Montana next week, dampening optimism about...

U.S. Oil Prices Up 6% For The Week, Biggest Weekly Gain in 3 Months
Saturday, 21 September 2019 02:17 WIB

Oil futures ended lower on Friday, but tallied a gain of almost 6% for the week, the largest such rise in three months. As the Saudis reveal the...