The Bank of England Super Thursday was dominated by Brexit. It might have been a coincidence that while the top BoE officials were meeting in London, British PM Theresa May was in Brussels having a sitdown with European President Jean-Claude Juncker in the latest-but-not-last attempt to re-negotiate a deal for the much-discussed, less-resolved Irish backstop, but the coincidence was not meaningless.
BOE Interest Rate Decision
Latest BoE related News
Latest BoE related Analysis
February meeting review
The Bank of England’s Monetary Policy Committee (MPC) held the Bank rate and the stock of the assets purchased unchanged in line with the market expectations while citing Brexit uncertainties ion lowering the short-term outlook for the UK growth. The Bank of England cited its own research in Agents summary to confirm that more than half of the UK companies began to implement no-deal Brexit contingency plans. Moreover, the Brexit uncertainty could lead to greater volatility of the economic data that would, in turn, be less of a signal for the outlook.
The Bank of England have kept their base rate unchanged at 0.75% as was almost unanimously expected, with a 9-0 vote split amongst rate-setters. The Pound has dropped to its lowest level in almost 3 weeks in the initial reaction and fallen back below the $1.29 handle, although it should be stated that the market reaction is fairly muted.
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 6 February 2019, the MPC voted unanimously to maintain Bank Rate at 0.75%.
December meeting review
The Bank of England decided to keep the monetary policy unchanged with the Bank rate at 0.75% and the volume of asset purchases at £435 billion with all Monetary Policy Committee members voting unanimously for the decision. The Bank of England acknowledged two important negative trends. First, it is the deterioration of the global economy with the downside risks to global growth increasing and the world economy set to slow sooner than the Bank had anticipated at the time of the November Inflation Report.
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 19 December 2018, the MPC voted unanimously to maintain Bank Rate at 0.75%.
Brexit is clearly becoming an increasing concern to the MPC, as evidenced by its frequent appearance in the Summary. We sense that the MPC is becoming less certain about the "smooth transition" assumption underlying its forecasts. Indeed, the probability that Article 50 needs to be extended by a few months is increasing materially, in our view.
Brexit negotiations, exploring unknown territory
The progress in Brexit negotiations is slower than expected. The next round of negotiations, originally scheduled on September 18, is postponed by a week. Media reports suggested that UK's PM Theresa May was preparing to make an "important intervention" on the talks. While the UK urged the EU to be more flexible and to move to trade deals, the EU insisted that the “divorce bill” issue has to be resolved first. EU's chief negotiator Michael Barnier noted last week that he was “very disappointed” by the UK government as it “seems to be backtracking” on commitments to the bill.
While the hawkish members, mainly Michael Saunders and Ian McCafferty, would warn of strong inflation on the economy, the rest would consider the overall economic environment and uncertain outcome of Brexit as key factors to keep the monetary policy unchanged.
What is the BOE?
Founded in 1694, the Bank of England (BoE) is the central bank of the United Kingdom. Sometimes known as the ‘Old Lady’ of Threadneedle Street, the Bank’s mission is "to promote the good of the people of the United Kingdom by maintaining monetary and financial stability".
The Bank of England is responsible for keeping the UK’s economy on the right track. They operate monetary policy by moving Bank Rate up and down and, in certain circumstances, we also supplement this with measures such as quantitative easing.
Who is BOE's president?
Mark Carney is Governor of the BoE and Chairman of the Monetary Policy Committee, Financial Policy Committee and the Prudential Regulation Committee. His appointment as Governor was approved by Her Majesty the Queen on 26 November 2012. The Governor joined the Bank on 1 July 2013.
Interest rates latest news
The World Interest Rates Table
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.