Money in United Kingdom
United Kingdom - Money
BoE leaves rates unchanged in March
At its meeting ending on 20 March, the Monetary Policy Committee (MPC) of the Bank of England (BoE) voted unanimously to keep the Bank Rate unchanged at 0.75%. The Bank was also in full agreement to maintain the stock of investment-grade corporate bond purchases at GBP 10 billion and to maintain the total stock of UK government bond purchases at GBP 435 billion, financed by the issuance of Central Bank reserves. All decisions were in line with market expectations.
The BoE remains in wait-and-see mode given the lack of clarity over the outcome of Brexit. Moreover, domestic price pressures are not excessive—inflation was marginally below the 2.0% target in February—while economic activity is mild and global economic momentum has eased, meaning the Bank was under little pressure to continue its tightening cycle.
In its communiqué, the BoE reiterated its guidance that monetary policy will likely tighten going forward, albeit gradually and to a limited extent. The Bank also reemphasized the impact Brexit could have on monetary policy decisions and left the door open to monetary easing in the case of a disorderly withdrawal.
According to economists at Nomura: “assuming Brexit ends up with some kind of deal and transition period then we think the BoE would be faced with improving sentiment, investment picking up and generally stronger economic growth”, leading to a tighter stance.
Daniel Vernazza, economist at UniCredit, takes an opposing view: “The BoE is now out of sync, with the Fed no longer expecting to raise rates this year and the ECB on hold at least until the end of the year. We expect the BoE to remain on hold throughout 2019 and to cut twice in 2H20”.
Despite a divergence in panelists’ views, the majority of our panelists still see the BoE raising rates at least once this year to ensure inflation remains close to target. The Consensus is for the Bank Rate to end 2019 at 1.01% and 2020 at 1.34%.
United Kingdom - Money Data
|Money (annual variation in %)||5.4||6.2||5.9||3.1||3.1|
5 years of economic forecasts for more than 30 economic indicators.
United Kingdom Money Chart
Source: Bank of England (BoE).
United Kingdom Facts
|Bond Yield||1.15||-3.04 %||Mar 20|
|Exchange Rate||1.32||-0.35 %||Mar 20|
|Stock Market||7,291||-0.26 %||Mar 20|
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March 22, 2019
On 21 March the EU agreed to delay Brexit until 12 April to give the UK parliament more time to coalesce around a way forward.
March 21, 2019
At its meeting ending on 20 March, the Monetary Policy Committee (MPC) of the Bank of England (BoE) voted unanimously to keep the Bank Rate unchanged at 0.75%.
March 20, 2019
Consumer prices rose 0.5% in February over the previous month, contrasting January’s 0.8% decline.
March 19, 2019
In the November-January period, the unemployment rate reached a fresh multi-decade low of 3.9%, while the employment rate rose to a record high.
March 12, 2019
Industrial production rose 0.6% in January over the prior month according to the Office for National Statistics, contrasting December’s 0.5% decline.