BoE: Mixed messages - Deutsche Bank

  • BoE: Mixed messages - Deutsche Bank

BoE: Mixed messages - Deutsche Bank

There has been no sharp increase in swap rates or fixed rates in the mortgage market.

"The Committee's best collective judgement therefore remains that, were the economy to develop broadly in line with the May Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to its target at a conventional horizon", it said in a summary of the MPC's meeting.

Dovish BoE Growth Forecasts Weigh Heavily on Pound Exchange RatesEven though two BoE policymakers voted in favour of an immediate interest rate hike this was not enough to prevent GBP exchange rates sliding lower on Thursday. The Bank is keen to emphasise that it thinks the weaker growth will prove to be temporary - and interestingly, that the initial estimate of 1Q GDP has been wildly underestimated.

Bank of England Governor Mark Carney has defended himself against a charge that his public comments on interest rate moves lack credibility.

This target figure of 2 percent is now expected to be reached in 2020, rather than in 2021 as the bank forecast three months ago.

'In a world where other central banks are seeking to normalise their rates, the combination of slow growth and Brexit uncertainty must surely be raising some concerns about the size of the current account deficit'. The current backdrop of global growth is the most synchronised it has been for nearly ten years and the subsequent spill over from this will inevitably affect the United Kingdom economy.

"Even if interest rates do rise slightly later this year, it's likely to only be by a small amount".

"We'll have found out the decision on the UK's divorce settlement from the European Union by October and the Bank can make any decisions with this in mind", Brandreth said. Since March 5th, 2009 (more than nine years ago), when interest rates were lowered to 0.5% in the United Kingdom, we have not seen much action despite all the talk and promises of higher interest rates.

Governor Mark Carney will elaborate on the outlook at a press conference at 12:30 London.

Despite this, Charlotte points out that more than 50% of the easy access market still only pays a rate that is less than 0.50%.

Just a few weeks ago, investors thought the bank would raise the rates to 0.75% today - its highest level since early 2009 0 as a sign of a strengthening economy.

The Bank of England has put back plans for an increase in interest rates after the weaker-than-expected performance of the economy in early 2018.

And the Bank does expect growth to bounce back over the rest of the year - alongside inflation falling more rapidly than expected over the next two years. This may be prudent but it risks the Bank being short of firepower come the next downturn.

The UK's total trade deficit narrowed in Q1 by GBP 0.7 billion to GBP 6.9 billion, driven mostly by a decline in goods imports from non-EU countries.