If Brexit uncertainty wasn’t casting such a dark cloud over the UK, the Bank of England could easily be raising interest rates today.
So savers and borrowers should listen out, for any hints about how rates could move in the months ahead.
Capital Economics says:
With the outcome of Brexit as unclear as ever, it is likely that the Bank of England’s Monetary Policy Committee (MPC) will keep rates unchanged at 0.75% on Thursday. However, the meeting’s accompanying Inflation Report may provide some clues to how keen the MPC is to change rates once Brexit has been resolved. So long as a deal is eventually struck, we think interest rates will rise more quickly than is widely anticipated.
Introduction: Bank of England Super Thursday
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
While Brexiteers get a special place in Hell, economics journalists must settle for a special place at the Bank of England today, as the central bank sets interest rates and releases its latest economic forecasts.
Yes, it’s the final Super Thursday (as they’re known in the City) before Brexit day. Investors, business leaders, consumers and politicians should all pay attention to what governor Mark Carney has to say about the risks of a no-deal Brexit, and the state of the UK and global economies.
BoE policymakers are expected to leave UK interest rates alone, at 0.75%. With Brexit uncertainty at new heights, this isn’t the moment to tighten monetary policy — especially as inflation has dropped back to just 2.1%, close to the official target.
The Bank’s economists may also cut their growth and inflation forecasts, given weakness in the global economy since their last meeting in November. So it should be a fun-packed press conference at lunchtime, when Carney takes questions from the media. Will he take the opportunity to issue any fresh Brexit warnings?
Fiona Cincotta of City Index says:
With Brexit clouding vision the central bank has their hands tied as far as policy is concerned. We expect further warnings over a no deal Brexit and the one hike a year mantra until Brexit uncertainty has cleared.
Also coming up today
Halifax Bank is releasing their latest UK house price data – it may confirm that prices are levelling off.
The European Commission will publish its latest economic forecasts this morning. They could slash growth forecasts for some euro area members, such as Germany and Italy, given recent weak data. That could spark a new row with Rome, just days after the Italian economy slumped into recession.
- 8.30am GMT: Halifax survey of UK house prices for January
- 10am GMT: EC publishes its latest economic forecasts
- Noon GMT: Bank of England interest rate decision & quarterly Inflation Report
- 12.30pm GMT: BoE governor Mark Carney holds press conference