Brexit uncertainty underpins Bank of England sentiment

Mark Carney has warned that the uncertainty surrounding the UK’s break with the European Union is beginning to take its toll on the British economy.

 

The Governor was speaking after the Bank voted 6-2 to hold interest rates at a record low of 0.25%, the same level since August 2016.

 

Aside from this the other main news was the cutting of the UK’s growth forecast down to 1.7% from its previous forecast of 1.9% made in May. The 2018 growth forecast was also cut from 1.7% to 1.6%.

 

Despite this fairly depressing headline the Bank does in fact expect wage growth to pick up and inflation to remain above target in the duration of this forecast.

 

In reality what this means is that the debate around UK monetary policy is still very much in the balance. Both Deputy Governor Broadbent and Chief Economist Andy Haldane have indicated that they may be looking to vote for an increse in the near future.

 

Sterling dropped to a nine month low against the Euro after the revised growth figures and lost all the gains earlier made against the USD.