BANK CUTS GROWTH FORECAST
The Bank of England (BoE) has reduced its growth forecast for the UK economy amid growing concerns over global trade tensions and fears of a no-deal Brexit.
In its latest policy statement, the BoE said it now expects economic growth to be flat during the second quarter of this year, a downgrade from the 0.2% quarterly growth rate it predicted in May. This reduction partly reflects an anticipated hangover from the rapid level of stockpiling that was witnessed in the run-up to the original Brexit deadline in March.
However, the BoE also noted a darkening outlook for the world economy and suggested that downside risks to growth have increased. Specifically, an intensification of global trade tensions and growing fears of a no-deal Brexit are major areas of concern. The BoE also highlighted a growing disconnect between the smooth Brexit underpinning its forecast and a potentially much more chaotic one that markets increasingly appear to be predicting……
INTEREST RATES REMAIN UNCHANGED
The BoE has again left interest rates on hold and reiterated its belief that the monetary policy response to Brexit could ultimately push rates in either direction.
Following its latest meeting on 19 June, the nine-member Monetary Policy Committee (MPC) voted unanimously to maintain its existing monetary policy stance. This marks the tenth consecutive month that the bank rate has remained unchanged since it was increased from 0.5% to 0.75% last August……
While the Brexit process effectively remains on hold until the Conservative party membership elects the country’s next Prime Minister, further warnings over the potential consequences of a no-deal withdrawal have been issued.
The race to elect the next leader of the Conservative party, and the country, is now in full swing. And, whether it is Jeremy Hunt or Boris Johnson that is ultimately handed the keys to 10 Downing Street on 23 July, will clearly have a major impact upon how Brexit unfolds. However, at the moment the process is effectively in limbo……