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Markets fall ahead of Bank of England interest rate decision – business live Bank of England warns Brexit uncertainty is hurting the economy – business live
(35 minutes later)
12.22pm BST
12:22
Bank minutes: Referendum uncertainty across the economy
The Bank of England’s policymakers heard plenty of evidence that the UK economy has weakened due to next week’s referendum vote.
The minute of the MPC meeting state that:
In the corporate sector, this included a sharp decline in the value of commercial real estate transactions and M&A, and reports of delayed business investment.
Evidence from the Bank’s Agents had suggested increased delays in corporate decision making, which was corroborated by a Deloitte survey of chief financial officers.
Survey information from Markit/CIPS and the BCC showed that for a material proportion of responding firms the referendum was having a detrimental effect on business activity, sometimes significantly so.
They also point to signs that demand for new cars and houses has fallen recently.
However.... the Bank also points out that other surveys have shown consumer demand is solid (such as this morning’s strong retail sales).
Minutes of @bankofengland attribute a fall in property and even car sales to referendum uncertainty. pic.twitter.com/GSqBaGVmFn
12.17pm BST
12:17
The full Bank of England minutes are here (sorry, that earlier link was to the summary)
12.13pm BST
12:13
You can read a summary of the Bank of England’s minutes yourselves, here.
Updated
at 12.16pm BST
12.12pm BST
12:12
The Bank of England appears to have hardened its Brexit warnings, despite pressure from the Leave campaign to cool things down.
Breaking: Bank of England strengthens its warnings on EU referendum risk - saying uncertainty could "spill-over" into global markets
Main #EURef related section of @bankofengland minutes today. Language similar to previous, if a little amplified pic.twitter.com/ytm4G6CZvM
12.10pm BST
12:10
BoE: Pound will probably tumble if Leave campaign win
Katie Allen
The Bank of England has also issued a fresh warning that the pound will tumble in the event of a Brexit vote.
The minutes state that:
“On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”
The Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.
12.06pm BST
12:06
Bank of England warns about referendum uncertainty
The Bank of England has warned that next week’s EU referendum is already hurting the UK economy.
It says there are signs that major spending decisions are being delayed, such as car and house purchases, as consumers and businesses wait to see if the UK votes to leave the European Union.
In the minutes of this month’s monetary policy meeting, just released, they say:
The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.
While consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment
Updated
at 12.23pm BST
12.02pm BST
12:02
BoE policymakers were unanimous in leaving borrowing costs on hold, and also leaving the quantitative easing programme unchanged.
Bank of England maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at £375 billion...
...Minutes of the MPC meeting reveal unanimous vote on #BankRate and Asset Purchases
12.00pm BST
12:00
Bank of England leaves rates on hold
Breaking: The Bank of England has left interest rates unchanged at their record low of 0.5%, continuing a run dating back to March 2009.
And here come the minutes of the meeting.....
11.50am BST11.50am BST
11:5011:50
10 minutes to go.....10 minutes to go.....
Stand by for @bankofengland int rate decision/minutes. No doubt they’ll warn abt Brexit impact (again). But will they go further than words?Stand by for @bankofengland int rate decision/minutes. No doubt they’ll warn abt Brexit impact (again). But will they go further than words?
11.24am BST11.24am BST
11:2411:24
Bad news from Greece -- the unemployment rate has jumped to 24.9% in the first quarter of this year.Bad news from Greece -- the unemployment rate has jumped to 24.9% in the first quarter of this year.
That’s a rise from 24.4% in October-December.That’s a rise from 24.4% in October-December.
11.12am BST11.12am BST
11:1211:12
Indonesia just surprised the markets by unexpectedly cutting interest rates!Indonesia just surprised the markets by unexpectedly cutting interest rates!
*BANK INDONESIA CUTS REFERENCE RATE TO 6.50% FROM 6.75%*BANK INDONESIA CUTS REFERENCE RATE TO 6.50% FROM 6.75%
Most economists surveyed by Reuters had expected the BoI to hold, butt instead it has eased monetary policy to in a bid to stir growth.Most economists surveyed by Reuters had expected the BoI to hold, butt instead it has eased monetary policy to in a bid to stir growth.
11.10am BST11.10am BST
11:1011:10
Consumer goods giant Unilever has become the latest UK company to encourage staff to vote Remain next week.Consumer goods giant Unilever has become the latest UK company to encourage staff to vote Remain next week.
It has sent a letter to all 100,000 staff, signed by CEO Paul Polman and his three predecessors, saying the firm would be “negatively impacted” by Brexit, adding:It has sent a letter to all 100,000 staff, signed by CEO Paul Polman and his three predecessors, saying the firm would be “negatively impacted” by Brexit, adding:
“We therefore hope that in the interests of Unilever, the UK,Europe, and indeed the wider global economy, the UK will choose to Remain and thereby continue to play a central role in Unilever’s long-term growth and prosperity.”“We therefore hope that in the interests of Unilever, the UK,Europe, and indeed the wider global economy, the UK will choose to Remain and thereby continue to play a central role in Unilever’s long-term growth and prosperity.”
So not actually a demand that staff reject Brexit, but a clear nudge.....So not actually a demand that staff reject Brexit, but a clear nudge.....
10.45am BST10.45am BST
10:4510:45
Mark Carney blasts Brexit criticismMark Carney blasts Brexit criticism
The Bank of England have now published governor Mark Carney’s letter to Leave campaigner Bernard Jenkin MP.The Bank of England have now published governor Mark Carney’s letter to Leave campaigner Bernard Jenkin MP.
It’s a tinglingly robust slapdown to Jenkin’s criticism that the BoE shouldn’t make “public comments” about the referendum.It’s a tinglingly robust slapdown to Jenkin’s criticism that the BoE shouldn’t make “public comments” about the referendum.
Carney begins by saying:Carney begins by saying:
I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.
And he then explains that the Bank of England has respected its independence, and stuck firmly to its remit when it has talked about Brexit dangers.And he then explains that the Bank of England has respected its independence, and stuck firmly to its remit when it has talked about Brexit dangers.
It’s online here.It’s online here.
..Governor Mark Carney says no hits back in letter to Leave director @bernardjenkin criticises his "misconceptions" pic.twitter.com/KldisaYb2W..Governor Mark Carney says no hits back in letter to Leave director @bernardjenkin criticises his "misconceptions" pic.twitter.com/KldisaYb2W
UpdatedUpdated
at 10.54am BSTat 10.54am BST
10.21am BST10.21am BST
10:2110:21
The US Federal Reserve must take some blame for today’s selloff.The US Federal Reserve must take some blame for today’s selloff.
Last night, the Fed cited weakening economic growth as one reason for leaving interest rates on hold.Last night, the Fed cited weakening economic growth as one reason for leaving interest rates on hold.
And that has dampened the mood in the City, says Chris Beauchamp of City firm IG:And that has dampened the mood in the City, says Chris Beauchamp of City firm IG:
There has been little to comfort investors over the past 24 hours, which is why yesterday’s gains have withered on the vine. The Fed meeting was perhaps their best hope, but even here Janet Yellen was not able to offer much in the way of good news.There has been little to comfort investors over the past 24 hours, which is why yesterday’s gains have withered on the vine. The Fed meeting was perhaps their best hope, but even here Janet Yellen was not able to offer much in the way of good news.
10.01am BST10.01am BST
10:0110:01
After two hours of trading, every European stock market has lost ground.After two hours of trading, every European stock market has lost ground.
Worries about the global economy, and central bankers’ ability to stimulate growth, are hitting shares -- along with Brexit concerns.Worries about the global economy, and central bankers’ ability to stimulate growth, are hitting shares -- along with Brexit concerns.
Avtar Sandu, senior commodities manager at Phillip Futures in Singapore, told Reuters:Avtar Sandu, senior commodities manager at Phillip Futures in Singapore, told Reuters:
The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion.The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion.
Investors are also alarmed by the big moves in Japan overnight, with shares sliding and the yen soaring.Investors are also alarmed by the big moves in Japan overnight, with shares sliding and the yen soaring.
Sea of red on #Markets ahead of #BoE decision -will Mark Carney speak out against #EUreferendum again? Japan markets tumble 3% after no moveSea of red on #Markets ahead of #BoE decision -will Mark Carney speak out against #EUreferendum again? Japan markets tumble 3% after no move
9.39am BST9.39am BST
09:3909:39
UK retail sales smash forecastsUK retail sales smash forecasts
Boom! UK retail sales jumped by 0.9% last month, beating forecasts of a 0.2% rise.Boom! UK retail sales jumped by 0.9% last month, beating forecasts of a 0.2% rise.
A surge in clothing sales led the recovery, according to the Office for National Statistics.A surge in clothing sales led the recovery, according to the Office for National Statistics.
Sales were 6.0% higher than a year ago, the biggest jump since September 2015.Sales were 6.0% higher than a year ago, the biggest jump since September 2015.
Clothing sales jumped by 4.3% during the month, the biggest rise in two years. Brits may have splashed out on new summer outfits as the sun made a rare (if brief) appearance through the clouds.Clothing sales jumped by 4.3% during the month, the biggest rise in two years. Brits may have splashed out on new summer outfits as the sun made a rare (if brief) appearance through the clouds.
This doesn’t suggest shoppers are hunkering back in fear that Britain is about to leave the EU. Unless....This doesn’t suggest shoppers are hunkering back in fear that Britain is about to leave the EU. Unless....
*U.K. MAY RETAIL SALES RISE 0.9%; MEDIAN EST. 0.2% GAINNotable rises in tinned food, duct tape, bottled water and shortwave radios.*U.K. MAY RETAIL SALES RISE 0.9%; MEDIAN EST. 0.2% GAINNotable rises in tinned food, duct tape, bottled water and shortwave radios.
Dear @ONS was the surge in UK Retail Sales due to purchases of tinned food and spades for digging underground shelters? #BrexitDear @ONS was the surge in UK Retail Sales due to purchases of tinned food and spades for digging underground shelters? #Brexit
UpdatedUpdated
at 9.44am BSTat 9.44am BST
9.35am BST
09:35
The European Central Bank has warned that Britain’s referendum as a threat to the eurozone economy.
In its monthly economic outlook, released this morning, the ECB says:
Downside risks continue to relate to developments in the global economy, to the upcoming British referendum on EU membership and to other geopolitical risks.
The ECB is also worried about the global economy, cautioning that:
....the outlook for emerging market economies remains more uncertain as growth in China decelerates and commodity-exporting countries adjust to lower commodity prices.
9.21am BST
09:21
Pound down (a bit)
The pound is weakening this morning, but it’s not a full-blown rout.
Sterling is down around half a cent against the US dollar at $1.415, and a similar amount against the euro at €1.256.
That’s a fairly muted reaction to this new IPSOS MORI poll putting Leave ahead.
It’s being published in the Evening Standard today, which says:
It is the first time since David Cameron pledged the referendum in January 2013 that Vote Leave have come out ahead in the respected monthly Ipsos MORI telephone survey, which is exclusive to the Evening Standard.
Immigration has overtaken the economy as the most important issue to how the public will vote, which is a significant boost to Boris Johnson and the Leave campaign.
LEAVE SENSATION: Our shock @IpsosMORI phone poll finds Remain six ponts behind https://t.co/8dgF0CQ0jN
Another 'why isn't sterling down more' moment.
9.08am BST
09:08
Just in.... a new opinion poll, putting giving the Leave campaign in the lead by 53% to 47%.
That’s a significant turnaround compared with last month:
Significant collapse in REMAIN vote with LEAVE now on 53%, finds @IpsosMORI pic.twitter.com/gJaRF4Cxot
9.06am BST
09:06
All this criticism from the Leave campaign probably won’t prevent the Bank of England from citing Brexit fears in the official minutes of this week’s MPC meeting.
It would be odd, frankly, if they ignored it, given the recent volatility.
Conner Campbell of SpreadEx reckons it could spark a deeper selloff.
The FTSE could well see its losses intensify as the day goes on with the Bank of England set to stoke those Brexit-fearing fires later this morning with a firmer warning against leaving the EU (the central bank is also expected to unsurprisingly keep interest rates on hold).
Mark Carney faced a lot of criticism last time he expressed an opinion on the referendum, so expect an apoplectic reaction from Vote Leave (and perhaps another fall from the pound) as Thursday continues.
8.40am BST
08:40
Crumbs, the Bank of England is really under fire from the Brexit camp.
Bernard Jenkin MP, a director of the Vote Leave campaign, has written to governor Mark Carney warning him not to breach the pre-referendum “purdah” rules by talking about the referendum.
Clearly Carney’s warning that Brexit was the biggest domestic risk to the UK economy, and could trigger a recession, has riled Leave campaigners.
But Carney has hit back, telling Jenkin that the Bank has simply been following its statutory duty to the UK people.
“All of the public comments that I, or other Bank officials, have made regarding issues related to the referendum have been limited to factors that affect the Bank’s statutory responsibilities and have been entirely consistent with our remits.”
And he finished with a zinger:
*Serious* shade from Carney. https://t.co/L9iElg8xHl #EUref pic.twitter.com/WM770kCtAB
More here.
Great BBC scoop, confirmed by Bank of England https://t.co/zVct2tWcJO
Updated
at 8.50am BST
8.34am BST
08:34
Bank of England criticised
Prime minister David Cameron has leapt to the Bank of England’s defence, after a volley of criticism from senior grandees.
Former chancellors Lord Lamont and Lord Lawson and ex-Tory leaders Iain Duncan Smith and Lord Howard accused the BoE, and the Treasury, of peddling “phoney forecasts” about the dangers of Brexit.
The quartet declared:
“There has been startling dishonesty in the economic debate, with a woeful failure on the part of the Bank of England, the Treasury and other official sources to present a fair and balanced analysis.
“They have been peddling phoney forecasts and scare stories to back up the attempts of David Cameron and George Osborne to frighten the electorate into voting Remain.”
Cameron (whose Remain campaign has relied on dire economic warnings), has hit back:
1/2. It's deeply concerning that the Leave campaign is criticising the independent Bank of England.
2/2. We should listen to experts when they warn us of the dangers to our economy of leaving the European Union.
8.15am BST
08:15
Mike van Dulken of Accendo Markets says:
Brexit fears continue to intensify a week out from the referendum, with the Federal Reserve again citing it as a headwind last night.
The markets struggling to shrug off risk aversion sending bond prices higher and yields ever lower or more negative.
And he fears the FTSE 100 could continue to slide, perhaps losing another 400 points to 5,500:
#FTSE100 failure to conquer 6000 yday means we could revisit Feb lows 5500 via a 400pt bearish flag pattern pic.twitter.com/HhuYhxyEh4
8.12am BST
08:12
FTSE 100 hits near four-month low
European stock markets have opened in the red, hit by the familiar cocktail of economic worries and Brexit angst.
In London, the FTSE 100 has dropped by 50 points, or 0.85%, to 5916. That erases yesterday’s recovery, and is the lowest point since 24 February.
It means the index has lost around £100bn of value in the last week alone.
Mining stocks and banks are among the biggest fallers in the City.
The French, German, Spanish and Italian markets have all dropped by over 1%, with traders fretting about how their economies will suffer if Britain leaves the EU.
8.03am BST
08:03
Nikkei tumbles and yen soars after BoJ decision
The Tokyo stock market has tumbled by 3% today, after the Bank of Japan left its stimulus programme on hold ahead of the Brexit referendum.
Hopes that the BoJ might announce fresh stimulus measures were dashed. Instead, policymakers voted to continue expanding the monetary base at an annual rate of about 80 billion yen.
That hit stocks, but also triggered a rush of money into the yen.
Japan’s currency smashed through the ¥104 mark against the US dollar for the first time since August 2014, trading as strongly as ¥103.98 to $1.
That will alarm top brass in Tokyo, who would rather see a rather weaker currency (to push up inflation away from around zero)
Live scenes from the BOJ as USDJPY cracks 104.00 for the first time since August 2014 pic.twitter.com/I9xPEQGCnq
The BoJ also singled out next week’s EU referendum as a key geopolitical threat to the Japanese economy, along with the “European debt problem”.
No action from #BoJ. Yen soars, #Nikkei closes down 3%. Will their hand be forced if #Brexit fears drives up the value of the yen further?
Updated
at 8.04am BST
7.51am BST
07:51
The agenda: One last Brexit warning from the Bank of England?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s Bank of England day. At noon, the Monetary Policy Committee will release its latest decision on interest rates, and say whether is is taking any fresh steps to stimulate the economy.
No changes are expected. But instead, the MPC is likely to release a fresh warning about the risks posed by next week’s EU referendum. The minutes of this month’s meeting could also highlight the harm already caused by Brexit uncertainty.
The financial markets are already in a nervous mood today, after the US Federal Reserve slashed its forecasts for interest rate hikes – and pinned some of the blame on the UK’s referendum vote.
Related: Federal Reserve puts interest rates rise on hold and blames Brexit
Also coming up today:
We’ll be tracking all the main events through the day....
Updated
at 7.51am BST