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Bank of England to reveal interest rate cut decision – business live Bank of England to reveal interest rate cut decision – business live
(35 minutes later)
9.34am BST
09:34
The last decade have been a ‘game of two halves’ at the Bank of England.
Once the credit crunch struck in 2007, it slashed borrowing costs to record lows and pumped hundreds of billions into the economy through QE.
But in recent years, the BoE has been sitting on its hands, while telling the UK that borrowing costs were likely to soon start rising. They never did, though, and now a cut seems rather more likely.
Here’s a timeline of the key events:
Related: UK interest rates timeline: the ups and lots of downs
9.19am BST
09:19
The Brexit referendum has already sent a chill through Britain’s housing market.
The Royal Institution of Chartered Surveyors’ latest survey shows that enquiries from potential buyers fell sharply last month.
Surveyors are also much gloomier. Expectations of future sales fell at the fastest rate since the survey began in 1998, and the balance of surveyors expecting house prices to fall in the next three months hit a five-year high.
Reversal of fortune. RICS survey points to risk of UK house price declines. Things were looking rosy not long ago. pic.twitter.com/W7Km6JmGcX
9.09am BST
09:09
Video: Hammond rules out emergency budget
Here’s a video clip of Britain’s new chancellor telling the nation not to expect an emergency budget this summer:
9.07am BST
09:07
The Bank of England actually took its decision yesterday, but won’t announce it until noon today.
Normally, that delay wouldn’t matter. But a lot has happened in the last 24 hours....
Important technical detail: @bankofengland’s MPC made its interest rate decision yday afternoon - before May became PM or Hammond appointed
MPC decisions are taken on Wed pm & are announced to the public Thursday noon. Normally not much changes between Wed & Thurs. Not this time
9.02am BST9.02am BST
09:0209:02
Fact of the morning: None of the nine policymakers on the Monetary Policy Committee have ever voted to cut UK interest rates.Fact of the morning: None of the nine policymakers on the Monetary Policy Committee have ever voted to cut UK interest rates.
One, Ian McCafferty, spent months arguing that borrowing costs should go up.One, Ian McCafferty, spent months arguing that borrowing costs should go up.
No one in current BoE MPC composition have voted to cut before, hard to see 5 or more taking immediate action today pic.twitter.com/T60LWdloaMNo one in current BoE MPC composition have voted to cut before, hard to see 5 or more taking immediate action today pic.twitter.com/T60LWdloaM
8.59am BST8.59am BST
08:5908:59
FTSE 100 hits 11-month highFTSE 100 hits 11-month high
Britain’s stock market has hits its highest level since the turmoil of last summer, as investors await the Bank of England’s decision in three hours time.Britain’s stock market has hits its highest level since the turmoil of last summer, as investors await the Bank of England’s decision in three hours time.
The FTSE 100 index of major blue-chip companies jumped by almost 1% in early trading to 6,742, a level not seen since August 2015.The FTSE 100 index of major blue-chip companies jumped by almost 1% in early trading to 6,742, a level not seen since August 2015.
The rally is led by miners, including Anglo American and UK housebuilders such as Barratt Development and Taylor Wimpey.The rally is led by miners, including Anglo American and UK housebuilders such as Barratt Development and Taylor Wimpey.
That suggests investors are anticipating fresh action from the Bank of England to help the economy.That suggests investors are anticipating fresh action from the Bank of England to help the economy.
The FTSE 250 index, which contains more UK-focused firms than the FTSE 100, has risen by 0.6% today.The FTSE 250 index, which contains more UK-focused firms than the FTSE 100, has risen by 0.6% today.
Tony Cross of TrustNet says the sight of Theresa May getting down to work has brought calm to the City.Tony Cross of TrustNet says the sight of Theresa May getting down to work has brought calm to the City.
The FTSE-100 is bounding higher ahead of that key MPC rate verdict that’s due at midday and perhaps once again an air of confidence that’s building in the market as the new prime minister announces her cabinet.The FTSE-100 is bounding higher ahead of that key MPC rate verdict that’s due at midday and perhaps once again an air of confidence that’s building in the market as the new prime minister announces her cabinet.
That said, a cut from Mark Carney today is far from guaranteed and there’s also this theme emerging of trying to ensure that the BoE doesn’t actively talk the country into recession.That said, a cut from Mark Carney today is far from guaranteed and there’s also this theme emerging of trying to ensure that the BoE doesn’t actively talk the country into recession.
8.51am BST8.51am BST
08:5108:51
James Rossiter, economist at City firm TD Securities, expects a quarter-point rate cut today (from 0.5% to 0.25%).James Rossiter, economist at City firm TD Securities, expects a quarter-point rate cut today (from 0.5% to 0.25%).
That would be followed by further easing in August, predicts Rossiter, who is a former Bank of England staffer.That would be followed by further easing in August, predicts Rossiter, who is a former Bank of England staffer.
He told Bloomberg TV that the Bank will “want to send a message to the markets that they are ready to act”.He told Bloomberg TV that the Bank will “want to send a message to the markets that they are ready to act”.
Rossiter adds that the BoE will probably “look through the inflationary shock” caused by a much weaker currency, rather than hike interest rates to cool prices (as this would hurt economic demand).Rossiter adds that the BoE will probably “look through the inflationary shock” caused by a much weaker currency, rather than hike interest rates to cool prices (as this would hurt economic demand).
8.28am BST8.28am BST
08:2808:28
Bloomberg has polled the City, and confirmed that a majority of economists predict a rate cut at noon today.Bloomberg has polled the City, and confirmed that a majority of economists predict a rate cut at noon today.
But a significant majority believe the Bank of England will hold off until they have more information about how the economy is faring.But a significant majority believe the Bank of England will hold off until they have more information about how the economy is faring.
Here’s the details:Here’s the details:
Thirty of 54 economists asked by Bloomberg predict a reduction, with the majority of those seeing a cut to a record-low 0.25 percent. Still, a lack of data on the outlook means 24 of those surveyed see no change this month.Thirty of 54 economists asked by Bloomberg predict a reduction, with the majority of those seeing a cut to a record-low 0.25 percent. Still, a lack of data on the outlook means 24 of those surveyed see no change this month.
More here: Bank of England Rate Cut in Focus as Brexit Rattles EconomyMore here: Bank of England Rate Cut in Focus as Brexit Rattles Economy
8.24am BST8.24am BST
08:2408:24
Pound up ahead of rate decision.Pound up ahead of rate decision.
The pound is rallying his morning, up three-quarters of a cent against the US dollar at $1.322.The pound is rallying his morning, up three-quarters of a cent against the US dollar at $1.322.
That suggests traders aren’t expecting a massive new stimulus boost from the Bank of England (as this would typically weaken the currency).That suggests traders aren’t expecting a massive new stimulus boost from the Bank of England (as this would typically weaken the currency).
Investors may also be reassured that Britain now has a new prime minister, and will soon have a new cabinet. That provides more certainty, despite one surprising appointment....Investors may also be reassured that Britain now has a new prime minister, and will soon have a new cabinet. That provides more certainty, despite one surprising appointment....
Related: 'Maybe the Brits are just having us on': the world reacts to Boris Johnson as foreign ministerRelated: 'Maybe the Brits are just having us on': the world reacts to Boris Johnson as foreign minister
TELEGRAPH: Matt nails it #tomorrowspaperstoday pic.twitter.com/Xvl75QsRCBTELEGRAPH: Matt nails it #tomorrowspaperstoday pic.twitter.com/Xvl75QsRCB
UpdatedUpdated
at 9.03am BSTat 9.03am BST
8.06am BST8.06am BST
08:0608:06
Hammond: Economy has taken a Brexit shockHammond: Economy has taken a Brexit shock
Philip Hammond is now speaking on Sky News, as his whistle-stop tour of the TV studios continues.Philip Hammond is now speaking on Sky News, as his whistle-stop tour of the TV studios continues.
He warns that the UK economy has “taken a shock”, as businesses and consumers weren’t expecting the public to vote to leave the European Union.He warns that the UK economy has “taken a shock”, as businesses and consumers weren’t expecting the public to vote to leave the European Union.
The number one challenge is to stabilise the economy, send a message that Britain is “open to business”.The number one challenge is to stabilise the economy, send a message that Britain is “open to business”.
He adds:He adds:
We are not turning our back on the world. We are determined to maintain our outward-looking stance, and determined to maintain the prosperity of our people.We are not turning our back on the world. We are determined to maintain our outward-looking stance, and determined to maintain the prosperity of our people.
8.01am BST8.01am BST
08:0108:01
Chancellor Hammond backs Mark CarneyChancellor Hammond backs Mark Carney
Britain’s new finance minister has given the Bank of England a vote of confidence, as it prepares to possibly cut interest rates.Britain’s new finance minister has given the Bank of England a vote of confidence, as it prepares to possibly cut interest rates.
Philip Hammond has told the BBC that Mark Carney is doing an “excellent job”, and revealed he’ll be meeting the governor this morning.Philip Hammond has told the BBC that Mark Carney is doing an “excellent job”, and revealed he’ll be meeting the governor this morning.
He also warned that the UK economy is already suffering from Brexit uncertainty.He also warned that the UK economy is already suffering from Brexit uncertainty.
New Chancellor Philip Hammond says Brexit has rattled the markets with firms putting decisions on holdNew Chancellor Philip Hammond says Brexit has rattled the markets with firms putting decisions on hold
New Chancellor Philip Hammond says Brexit has rattled the markets with firms putting decisions on holdNew Chancellor Philip Hammond says Brexit has rattled the markets with firms putting decisions on hold
Hammond has also confirmed that he won’t deliver an ‘emergency budget’ in the next few weeks.Hammond has also confirmed that he won’t deliver an ‘emergency budget’ in the next few weeks.
“The prime minister made clear we will do an autumn statement in the usual way in the autumn and we’ll look carefully over the summer at the situation.“The prime minister made clear we will do an autumn statement in the usual way in the autumn and we’ll look carefully over the summer at the situation.
I’m seeing the governor of the Bank of England this morning and we’ll take stock of where we are.”I’m seeing the governor of the Bank of England this morning and we’ll take stock of where we are.”
The emergency budget idea was floated by his predecessor George Osborne - who has been relegated to the back benches.The emergency budget idea was floated by his predecessor George Osborne - who has been relegated to the back benches.
7.29am BST7.29am BST
07:2907:29
The Agenda: Will Bank of England cut rates today?The Agenda: Will Bank of England cut rates today?
Good morning.Good morning.
There’s one question on the lips of investors worldwide - will the Bank of England slash UK interest rates to fresh record lows today?There’s one question on the lips of investors worldwide - will the Bank of England slash UK interest rates to fresh record lows today?
With Britain at risk of recession following the Brexit vote, many economists in the City are predicting that rates will be cut to 0.25% at noon London time.With Britain at risk of recession following the Brexit vote, many economists in the City are predicting that rates will be cut to 0.25% at noon London time.
That would end a seven-year stretch in which borrowing costs have been pegged at 0.5%.That would end a seven-year stretch in which borrowing costs have been pegged at 0.5%.
Governor Mark Carney has already given clear signs that the BoE will act soon. Two weeks ago, he declared:Governor Mark Carney has already given clear signs that the BoE will act soon. Two weeks ago, he declared:
“In my view, and I am not prejudging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”“In my view, and I am not prejudging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
And as this chart shows, investors reckon there’s an 80% chance of a rate cut today:And as this chart shows, investors reckon there’s an 80% chance of a rate cut today:
And swaps say... CUT! Bank of England decision due at noon in London #BrexitWIRP on the Bloomberg pic.twitter.com/Tfgrc8m55pAnd swaps say... CUT! Bank of England decision due at noon in London #BrexitWIRP on the Bloomberg pic.twitter.com/Tfgrc8m55p
But it’s not a nailed-down certainty. The Bank of England could decide to leave interest rates on hold today, and wait until August to respond to Britain’s new economic challenges.But it’s not a nailed-down certainty. The Bank of England could decide to leave interest rates on hold today, and wait until August to respond to Britain’s new economic challenges.
They also have to consider inflation, which could burst back into life as the weak pound forces up the cost of imported goods (and the UK imports a lot).They also have to consider inflation, which could burst back into life as the weak pound forces up the cost of imported goods (and the UK imports a lot).
Rate cuts aren’t the only weapon in Mark Carney’s arsenal. The BoE could launch a new quantitative easing programme – pumping more money into the economy, by buying bonds from commercial banks. Or it could announce new measures to boost lending to the real economy.Rate cuts aren’t the only weapon in Mark Carney’s arsenal. The BoE could launch a new quantitative easing programme – pumping more money into the economy, by buying bonds from commercial banks. Or it could announce new measures to boost lending to the real economy.
The decision comes at noon today, along with the minutes of this month’s meeting. They will give an insight into the Bank’s thinking about the state of the UK economy, and the consequences of the Brexit vote.The decision comes at noon today, along with the minutes of this month’s meeting. They will give an insight into the Bank’s thinking about the state of the UK economy, and the consequences of the Brexit vote.
Expect the markets to move sharply at noon -- especially if the Bank does something unexpected....Expect the markets to move sharply at noon -- especially if the Bank does something unexpected....
We’ll be tracking the build-up to the big decision, and instant reaction and analysis from noon.We’ll be tracking the build-up to the big decision, and instant reaction and analysis from noon.
Plus other key developments in the City and beyond, as Britain’s new chancellor - Philip Hammond – gets to work.....Plus other key developments in the City and beyond, as Britain’s new chancellor - Philip Hammond – gets to work.....
UpdatedUpdated
at 7.46am BSTat 7.46am BST