View more on these topics

Bank of England keeps rates on hold

Mark-Carney-with-bank-note-in-background-700.jpgThe Bank of England has left interest rates at 0.25 per cent at its September meeting, following its cut to rates in August in response to the UK’s vote to leave the European Union.

However, the central bank has reiterated that it expects to cut rates further before the end of the year.

Its QE package also remains the same after it expanded it to £60bn in August’s stimulus.

In the minutes accompanying today’s decision, the monetary policy committee said the stimulus package had “led to a greater than anticipated boost to UK asset prices”.

“Short and long-term market interest rates fell notably following the announcement; corporate bond spreads narrowed, and issuance was strong; and equity prices rose.”

Governor Mark Carney has had to defend August’s monetary stimulus package as indicators suggest the UK economy has held up better than expected in the months following the Brexit vote.

However, the MPC notes today stated that its view of the “contours of the economic outlook following the EU referendum” had not changed.

It stated a majority of members expect to support a further cut before the year’s end to the rate’s effective lower bound. “The MPC currently judges this bound to be close to, but a little above, zero,” it stated.

This month services sector PMIs reached 52.9 following an 89-month low of 47.4 in July, as businesses reeled from the UK’s vote to leave the European Union.

Responding to questioning from pro-Brexit Conservative MP Jacob Rees-Moag, Carney told a Treasury select committee this month that he was “serene” in the decisions by the MPC and FPC following the June vote.

“In terms of how the economy has responded, what’s happened directionally on business investment and commercial real estate and the bigger decisions and that relative to the resilience of the consumer sector, I feel comfortable that the judgement that the referendum represented a risk to monetary policy.”

Recommended

Mark-Carney-with-bank-note-in-background-700.jpg

Mark Carney ‘serene’ over Bank’s Brexit actions

Bank of England governor Mark Carney has told MPs he is “absolutely serene” on the judgements made by the monetary policy committee in the the lead up to and aftermath of Brexit. At a Treasury committee hearing yesterday, chairman Andrew Tyrie told Carney he would have the chance to answer allegations that he “over-egged” the […]

UK-Currency-Money-Pound-GBP-620x413.jpg
1

Has Bank of England’s QE package overshot its mark?

Bond prices have spiked causing yields to fall following the Bank of England’s latest tranche of bond buying, prompting some to question whether the Bank’s QE package has gone too far. Yesterday, the Bank of England bought £1.17bn of gilts with maturities of 15 years or longer as part of its stimulus programme. In the reverse […]

Data-Corporate-Finance-Business-Pen-Graph-Growth-700x450.jpg

Bank of England warns of job losses and slashes GDP forecasts

The Bank of England is forecasting job losses and weaker growth despite the stimulus package announced today. The BoE cut the base rate to 0.25 per cent and has expanded quantitative easing by £60bn to £435bn, including £10bn of corporate bond purchases. It has also suggested rate cuts could reach close to zero by the […]

The FCA’s five fixes for retirement information

The Financial Conduct Authority (FCA) has started to change the way that people will be told about their pension options. In a recent market study paper, they lay out their final proposals on the information that should be delivered to people approaching retirement and how it should look and feel. During 2015, there will be […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment