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Bank of England keeps rates unchanged as it cuts growth forecast to zero | Bank of England keeps rates unchanged as it cuts growth forecast to zero |
(about 2 hours later) | |
The Bank of England has warned that economic growth in Britain could grind to a halt during the second quarter amid mounting risks to the economy from a no-deal Brexit. | The Bank of England has warned that economic growth in Britain could grind to a halt during the second quarter amid mounting risks to the economy from a no-deal Brexit. |
Sounding the alarm as its nine-member monetary policy committee (MPC) voted unanimously to leave interest rates on hold at 0.75%, the central bank said the lack of resolution was weighing on growth. | Sounding the alarm as its nine-member monetary policy committee (MPC) voted unanimously to leave interest rates on hold at 0.75%, the central bank said the lack of resolution was weighing on growth. |
Bank of England slashes growth forecast and leaves interest rates unchanged - business live | Bank of England slashes growth forecast and leaves interest rates unchanged - business live |
Threadneedle Street slashed its growth forecast for the three months to June to zero, from 0.2%, amid a broader deterioration in the economy since Theresa May extended the Brexit deadline until the autumn. | Threadneedle Street slashed its growth forecast for the three months to June to zero, from 0.2%, amid a broader deterioration in the economy since Theresa May extended the Brexit deadline until the autumn. |
Warning that downside risks to growth had increased as the threat of crashing out without a deal has risen up the agenda, it said that companies expect uncertainty would persist, while there were no clear signs that firms would increase investments in Britain. | Warning that downside risks to growth had increased as the threat of crashing out without a deal has risen up the agenda, it said that companies expect uncertainty would persist, while there were no clear signs that firms would increase investments in Britain. |
The Bank said the pound had dropped in value on the foreign exchanges, given “the perceived likelihood of a no-deal Brexit has risen”, while mounting tensions over international trade amid the US-China tariff dispute had also slowed the economy. | |
“Underlying growth in the UK appears to have weakened slightly in the first half of the year relative to 2018,” the MPC said. | “Underlying growth in the UK appears to have weakened slightly in the first half of the year relative to 2018,” the MPC said. |
Some companies have begun running down stockpiles built up in the run-up to the original Brexit deadline on 29 March – now delayed until the end of October – in a move that is likely to weigh on economic growth in future, the Bank said. | |
The rush to build up emergency supplies of goods and raw materials had previously helped boost GDP growth to 0.5% in the first quarter. However, goods trade with the EU weakened sharply in April, according to the MPC, in a sign companies were running down stock. | The rush to build up emergency supplies of goods and raw materials had previously helped boost GDP growth to 0.5% in the first quarter. However, goods trade with the EU weakened sharply in April, according to the MPC, in a sign companies were running down stock. |
The majority of businesses surveyed by the Bank’s networks of regional agents across the country believe Brexit uncertainty would not be resolved by the end of the year. Only a fifth said they thought there would be clarity. | The majority of businesses surveyed by the Bank’s networks of regional agents across the country believe Brexit uncertainty would not be resolved by the end of the year. Only a fifth said they thought there would be clarity. |
Should Brexit pass smoothly, the MPC said that an ongoing increase in interest rates would be required at a gradual pace and to a limited extent to maintain its inflation target of 2%. | Should Brexit pass smoothly, the MPC said that an ongoing increase in interest rates would be required at a gradual pace and to a limited extent to maintain its inflation target of 2%. |
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Inflation | Inflation |
Bank of England | Bank of England |
Mark Carney | Mark Carney |
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Economic growth (GDP) | Economic growth (GDP) |
Economics | Economics |
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