Bank of England

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The latest ONS inflation data came out this morning, and it showed a huge jump in the 12-month Consumer Prices Index, rising to 2.9% in August, up from 2.6% in July. These increases were broad based, with prices for clothing and footwear, furniture and household goods and restaurants and hotels rising at their fastest rates since 2012 or earlier. Air fares also rose between July and August but the rise was smaller than between the same two months a year ago and so resulted in a partial…

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Cable is now down over 17.5% since the UK voted to leave the EU back in June and appears to have now stabilised below the 1.23 handle. Some say the currency was overvalued for years and its fall post-Brexit could serve as a release valve help loosen the stranglehold of the financial elites over the UK economy, which is just now just rebalancing as expected. Exports will, no doubt, ultimately be boosted by the weaker pound. It is pretty obvious that being the unrivalled fina…

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The BoE cut interest rates to a record low of 0.25% today as well as pumping £170bn of new money into the economy as a further stimulus package to prevent the UK falling into recession following the Brexit vote in June. The Bank’s Monetary Policy Committee unanimously voted 9-0 to reduce rates by 0.25% cutting borrowing rates for the first time in 7 years. Forecasts for the growth of the UK economy were cut by the biggest single amount since regular forecast have been…

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UK Chancellor of the Exchequer, George Osborne made his first statement since the UK’s EU referendum this morning in a bid to stabilise markets. He stressed that the UK government is “ready to deal with the consequences” and that the UK economy is strong. Despite these reassuring words, he also heeded that there will need to be “a period of adjustment” and that “there is going to be an impact on public finances”, although any new budget would b…

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And so it's begun......4 months of constant debate on whether or not the UK should stay or leave the EU. Even though the date has only been set now for less than a week, we have already seen a massive impact on the value of Sterling against all of it's major trading peers. There are very few opinions to suggest that this is not set to continue as the uncertainty builds towards the 23rd June 2016 day of destiny. This morning saw cable duck below the 1.39 handle, curr…

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Bank of England Governor Mark Carney dampened expectations on the timing of the first UK rate hike innearly a decade yesterday, predominantly citing the recent slowdown in China and other emerging market economies as the main reason. "The outlook for global growth has weakened since the August inflation report," the BOE's Monetary Policy Committee said in a statement. The BOE highlighted that it is, by no means, in any rush to raise its benchmark interest rate and v…

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While there is little doubt the BoE vote will result in an unchanged verdict on rates this afternoon, economists will be looking for signs in the minutes as to when the gradual policy tightening might begin. There are a few experts predicting another BoE rate setter is set to join Ian McCafferty to vote for a 25 basis-point hike this time around, however most will be looking for stronger indicators regarding the UK economy in the coming months before doing so. Inflation remains t…

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The Bank of England minutes for the MPC meeting ending on the 3June recorded that the committee voted unanimously (9 – 0) to leave interest rates unchanged at 0.50% and asset purchases (QE) at £375bn. Lower inflation is likely to dissipate, which is in line with previous comments from Mark Carney comments that the slowdown in inflation was transitory due to the sudden fall in energy prices. Any change from the MPC member voting from 9-0 would be seen as a signal that monetary pol…

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In April the ONS reading for CPI was that UK prices had gone down (deflation). In the height of the recession inflation peaked at over 5%, significantly above the Bank of England’s 2% target. The governor at the time, Mervyn King would write a letter to the Chancellor explaining why inflation was overshooting the central banks remit. With inflation high and asset prices appreciating, some analysts believed that interest rates would need to be increased from the record low of 0.50%. The…

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At the meeting the committee voted to leave interest rates and asset purchases (QE) unchanged at 0.50% and £375bn. Today’s release of the Minutes of MPC meeting 7 and 8 May 2015, were as analysts had expected that the members voted unanimously to stay unchanged. The headlines from the minutes were that two MPC members decision were “finely balanced” between unchanged and raising interest rates. The market impact from the minutes was minimal, the release was as the mar…

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The ONS will release their latest reading of UK inflation at 9:30am this morning, and there is a strong chance that the reading will be negative. The previous inflation reading was zero, in short prices measured on a basket of goods, were unchanged from the previous month. The Bank of England’s mandate is to target a 2% inflation rate; during the financial crisis this was consistently overshot peaking above 5%. The Governor, Mervyn King would write a letter to the Chancellor explaining…

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The Bank of England released their inflation report following a self-imposed 6 week quiet period for the UK general election. The Bank revised their estimates for growth in 2015 from 2.9% 2.5% and 2.9% to 2.6% in 2016. At the same time the report highlighted their view that inflation was expected to rise notably, once the short-lived factors such as fall in crude price dissipate. The base interest rate has been at 0.50% for the last 6 year, with inflation for multiple years overshootin…

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Sterling has traded to a 5 year low in the currency markets against the US dollar on the back of poor construction and production data released by the ONS. On Thursday the Bank of England’s MPC announced their decision to leave interest rates and quantitative easing unchanged as expected, with the pound weakening following disappointing trade deficit figures. Thursdays close was the lowest level for Cable since June 2010, in part due to a strong dollar combined with the weak UK d…

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The Office for National Statistics (ONS) released their figures for February showed that the trade deficit widen to £2.9 billion from £1.5 billion in January. The release highlighted that the trade in oil, the monthly deficit on oil was virtually unchanged at £0.7 billion in February 2015. Weak Pound The release from the ONS said that exports to the European Union were at the lowest on record (since 1998) in part driven by the strengthening pound versus the Euro…

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The official starting gun for the UK general election has begun, as the current Prime Minister David Cameron ceremonially visits the Queen to dissolve parliament. The coming UK election is likely to have no overall majority and is one of the closest modern elections. What does this mean for Sterling? The uncertainty of the electoral outcome is a risk to the UK’s currency. The two main parties (Conservative and Labour) will need to create a coalition to form a government but…

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