Money in United Kingdom
United Kingdom - Money
BoE stays put in September, signaling rising Brexit uncertainty
At its meeting ending on 12 September, 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 11 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.
A change in the Bank’s stance in September was highly unlikely, following the decision to raise rates at the previous meeting in August in response to a pick-up in economic activity in Q2 and inflation above the 2% target. The Bank highlighted that the projections made in the August inflation report remained valid in light of recent figures, which show an economy expanding at a moderate pace, a tight labor market and largely stable inflation. The BoE will likely look to analyze the impact of the recent rate hike and wait for greater clarity regarding Brexit before resuming its tightening cycle.
In its communiqué, the BoE reiterated its guidance that monetary policy will tighten going forward, albeit gradually and to a limited extent. However, the Bank placed greater emphasis on Brexit compared to the previous meeting, highlighting rising financial market uncertainty over the withdrawal process. This suggests that the evolution of the UK’s relationship with the EU will be a key factor guiding future monetary policy decisions. Assuming an orderly EU withdrawal, domestic price pressures are likely to build on emerging capacity constraints, necessitating subsequent rate hikes. Virtually all Met the why particular panelists see the BoE raising rates at least once next year to ensure inflation returns to target.
BoE Governor Mark Carney recently announced that he would remain in his post until January 2020, compared to the previous date of June 2019. The move is aimed to provide continuity as the UK transitions towards a new relationship with the EU.
UK Interest Rate Forecast
Our panelists expect the Bank Rate to end 2018 at 0.75% and 2019 at 1.06%.
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||1.45||-3.04 %||Sep 20|
|Exchange Rate||1.33||-0.35 %||Sep 20|
|Stock Market||7,367||-0.26 %||Sep 20|
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September 19, 2018
Consumer prices rose 0.7% in August over the previous month, up from July’s flat reading.
September 13, 2018
At its meeting ending on 12 September, the Monetary Policy Committee (MPC) of the Bank of England (BoE) voted unanimously to keep the Bank Rate unchanged at 0.75%.
September 11, 2018
In the May-July period the unemployment rate stayed at 4.0%, the joint-lowest rate since 1975 and below the Central Bank’s estimate for the equilibrium unemployment rate of 4.25%.
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Industrial production increased 0.1% in July over the prior month according to the Office for National Statistics, down from the 0.4% rise in June.
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According to new monthly GDP data released by the Office for National Statistics (ONS), the economy expanded 0.3% in July over the prior month in seasonally-adjusted terms.