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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/14/bank-of-england-interest-rates-cut-brexit-record-low-today-business-live
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| Bank of England leaves interest rates on hold despite Brexit fears – live updates | Bank of England leaves interest rates on hold despite Brexit fears – live updates |
| (35 minutes later) | |
| 12.58pm BST | |
| 12:58 | |
| Is Mark Carney the 'unreliable boyfriend' again? | |
| Alan Clarke, economist at Scotia Bank, has blasted Mark Carney for creating the impression that the Bank of England might cut rates today. | |
| He writes that Carney, who was famously labelled an ‘unreliable boyfriend’ early in his tenure, should have known better. | |
| If ever there was a case for abandoning forward guidance and central bankers keeping quiet, this meeting is it. | |
| Virtually nobody was going for a rate cut at this meeting before Carney’s intervention a couple of weeks ago. Most assumed that the weakness of the pound and the need to wait for incoming data would lead to a pause at least until August. But for no apparent reason, Governor Carney decided to tease the market, let it price in a high probability of a rate cut, only to disappoint. | |
| As if the situation wasn’t volatile and uncertain enough, the BoE Governor poured petrol on the flames. This was a completely unnecessary intervention. | |
| 12.53pm BST | |
| 12:53 | |
| Duncan Weldon, head of research at the Resolution Group, has an interesting theory. | |
| He reckons that Bank of England might not cut rates next month either, and might launch more quantitative easing or a new funding for lending scheme (FLS) instead. | |
| He’s basing that on the Bank’s minutes (the part I posted a few minutes ago) | |
| I'm not sure the BOE is pre announcing a cut for next month. I'm reading paras 35-37 as talking up other options - FLS, QE, etc. | |
| I'm not sure this coming easing is going to involve base rate cuts. Emphasis in minutes on functioning of financial system looks important. | |
| If I'm right - we need some strong signalling from MPC members in the next three weeks to avoid disappointing market. | |
| 12.49pm BST | |
| 12:49 | |
| Shares in London have fallen back following the surprise news that UK interest rates are on hold. | |
| The FTSE 100 index, which was up 60 points at 11.59am, is now flat. | |
| That’s largely due to the surge in sterling -- a stronger pound will eat into the overseas earnings of the large multinationals in the blue-chip index. | |
| 12.45pm BST | |
| 12:45 | |
| UK interest rates have never been this low, and they’ve rarely been unchanged for this long. | |
| The Bank of England Bank Rate remains at a 322 year low for at least a few more weeks. pic.twitter.com/8WvLrABAgu | |
| 12.35pm BST | |
| 12:35 | |
| With interest rates remaining stable, there is no need to update our monetary policy symphony.... | |
| 12.32pm BST | 12.32pm BST |
| 12:32 | 12:32 |
| Commercial property prices are going to suffer ‘sizeable’ falls following last month’s Brexit vote, says the Bank of England. | Commercial property prices are going to suffer ‘sizeable’ falls following last month’s Brexit vote, says the Bank of England. |
| It has also trimmed its forecast for house price rises. | |
| Today’s minutes state that: | Today’s minutes state that: |
| Regarding the housing market, a preview of the June RICS survey had pointed to a marked weakening in expected activity and prices following the referendum result. Bank staff had lowered their forecast of housing investment significantly and had revised down the near-term outlook for house prices. | Regarding the housing market, a preview of the June RICS survey had pointed to a marked weakening in expected activity and prices following the referendum result. Bank staff had lowered their forecast of housing investment significantly and had revised down the near-term outlook for house prices. |
| The forecast for housing investment had a direct read-across to GDP, while the outlook for house prices was expected to act as a drag on household consumption. Staff were also expecting sizeable falls in commercial real estate prices in the near term. | The forecast for housing investment had a direct read-across to GDP, while the outlook for house prices was expected to act as a drag on household consumption. Staff were also expecting sizeable falls in commercial real estate prices in the near term. |
| Updated | |
| at 12.39pm BST | |
| 12.27pm BST | 12.27pm BST |
| 12:27 | 12:27 |
| Bank of England leaves rates on hold: instant reaction | Bank of England leaves rates on hold: instant reaction |
| Lionel Barber, editor of the FT, reckons the Bank of England didn’t want to cause alarm by slashing rates today. | Lionel Barber, editor of the FT, reckons the Bank of England didn’t want to cause alarm by slashing rates today. |
| Bank of England leaves interest rate unchanged: Carney trying to reinforce sense of stability with new government - and keep powder dry | Bank of England leaves interest rate unchanged: Carney trying to reinforce sense of stability with new government - and keep powder dry |
| Sky News’s Dharshini David believes the BoE needs more evidence about the UK economy following the Brexit vote. | Sky News’s Dharshini David believes the BoE needs more evidence about the UK economy following the Brexit vote. |
| only 1 person voted for rate cut not surprising - cut/more QE may have looked like panic given lack of hard evidence on economy post June 24 | only 1 person voted for rate cut not surprising - cut/more QE may have looked like panic given lack of hard evidence on economy post June 24 |
| Economist Marc Ostwald reckons the Bank made the right decision. | Economist Marc Ostwald reckons the Bank made the right decision. |
| #BOE right decision; August still on, but again total guidance failure (viz comments 2 wks ago 'package of measures', #unreliableboyfriend | #BOE right decision; August still on, but again total guidance failure (viz comments 2 wks ago 'package of measures', #unreliableboyfriend |
| 12.24pm BST | 12.24pm BST |
| 12:24 | 12:24 |
| Why the Bank left rates on hold | Why the Bank left rates on hold |
| You can see the minutes of the meeting online, here. | You can see the minutes of the meeting online, here. |
| The key section comes at the end, where the Bank explains that its policymakers decided to resist easing monetary policy until they have done more analysis of the situation. | The key section comes at the end, where the Bank explains that its policymakers decided to resist easing monetary policy until they have done more analysis of the situation. |
| Here’s a flavour (I’ve bolded up the key points). | Here’s a flavour (I’ve bolded up the key points). |
| The MPC was committed to taking whatever action was needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the Committee expected monetary policy to be loosened in August. | The MPC was committed to taking whatever action was needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the Committee expected monetary policy to be loosened in August. |
| The Committee reviewed a range of possible stimulus measures and combinations thereof. It considered the potential interaction between various measures and the financial system, and therefore their influence on output and inflation. Committee members had an initial exchange of views on various possible packages of measures. | The Committee reviewed a range of possible stimulus measures and combinations thereof. It considered the potential interaction between various measures and the financial system, and therefore their influence on output and inflation. Committee members had an initial exchange of views on various possible packages of measures. |
| The exact extent of any additional stimulus measures would be based on the Committee’s updated forecast. Their composition would take account of any interactions with the financial system and their effectiveness in supporting the domestic economy. Further detailed analysis across all policy areas of the Bank would be required. | The exact extent of any additional stimulus measures would be based on the Committee’s updated forecast. Their composition would take account of any interactions with the financial system and their effectiveness in supporting the domestic economy. Further detailed analysis across all policy areas of the Bank would be required. |
| Against that backdrop, most members judged it appropriate to leave the stance of monetary policy unchanged at this meeting. | Against that backdrop, most members judged it appropriate to leave the stance of monetary policy unchanged at this meeting. |
| For one member, the subdued economic outlook before the referendum had already come close to warranting further stimulus. The early evidence supported the view that demand was likely to weaken further following the referendum. The resulting outlook for medium-term inflation – even taking into account the boost from the lower level of sterling – therefore justified an immediate loosening of monetary policy, to be supplemented by a package of additional measures in August. | For one member, the subdued economic outlook before the referendum had already come close to warranting further stimulus. The early evidence supported the view that demand was likely to weaken further following the referendum. The resulting outlook for medium-term inflation – even taking into account the boost from the lower level of sterling – therefore justified an immediate loosening of monetary policy, to be supplemented by a package of additional measures in August. |
| So, Mark Carney then proposed leaving interest rates on hold -- most of the committee backed him. | So, Mark Carney then proposed leaving interest rates on hold -- most of the committee backed him. |
| However the newest member, Gertjan Vlieghe (a former hedge fund economist) pushed for an immediate rate cut. | However the newest member, Gertjan Vlieghe (a former hedge fund economist) pushed for an immediate rate cut. |
| 12.13pm BST | 12.13pm BST |
| 12:13 | 12:13 |
| Bank: Brexit vote is now hurting the economy | Bank: Brexit vote is now hurting the economy |
| The Bank of England’s agents, who work across the UK, are seeing signs that the economy is weakening. | The Bank of England’s agents, who work across the UK, are seeing signs that the economy is weakening. |
| It says: | It says: |
| Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence. | Official data on economic activity covering the period since the referendum are not yet available. However, there are preliminary signs that the result has affected sentiment among households and companies, with sharp falls in some measures of business and consumer confidence. |
| And the BoE singles out the housing market as a significant concern: | And the BoE singles out the housing market as a significant concern: |
| Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term. | Early indications from surveys and from contacts of the Bank’s Agents suggest that some businesses are beginning to delay investment projects and postpone recruitment decisions. Regarding the housing market, survey data point to a significant weakening in expected activity. Taken together, these indicators suggest economic activity is likely to weaken in the near term. |
| 12.10pm BST | 12.10pm BST |
| 12:10 | 12:10 |
| As well as leaving rates on hold, the Bank of England voted 9-0 to leave its quantitative easing programme unchanged at £375bn. | As well as leaving rates on hold, the Bank of England voted 9-0 to leave its quantitative easing programme unchanged at £375bn. |
| Monetary policy summary and minutes of the MPC meeting ending on 13 July 2016 https://t.co/KxIXEgjl8c #BankRate pic.twitter.com/XZlgUZIV0c | Monetary policy summary and minutes of the MPC meeting ending on 13 July 2016 https://t.co/KxIXEgjl8c #BankRate pic.twitter.com/XZlgUZIV0c |
| 12.10pm BST | 12.10pm BST |
| 12:10 | 12:10 |
| Good news for holidaymakers heading to Europe this summer.... the pound has jumped by 1.5 cents against the euro to €1.20. | Good news for holidaymakers heading to Europe this summer.... the pound has jumped by 1.5 cents against the euro to €1.20. |
| 12.07pm BST | 12.07pm BST |
| 12:07 | 12:07 |
| Bank of England: We'll probably stimulate in August | Bank of England: We'll probably stimulate in August |
| The Bank of England has also delivered a clear signal that it will ease monetary policy in August. | The Bank of England has also delivered a clear signal that it will ease monetary policy in August. |
| The minutes of today’s meeting state that: | The minutes of today’s meeting state that: |
| “In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August, | “In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August, |
| “The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.” | “The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.” |
| That will give the Bank’s economists more time to actually see the impact of the Brexit vote on the UK economy. | That will give the Bank’s economists more time to actually see the impact of the Brexit vote on the UK economy. |
| 12.04pm BST | 12.04pm BST |
| 12:04 | 12:04 |
| One Bank of England policymaker, Gertjan Vlieghe, voted to cut interest rates to 0.25%. | One Bank of England policymaker, Gertjan Vlieghe, voted to cut interest rates to 0.25%. |
| But the other eight members of the MPC voted to leave borrowing costs on hold until August. | But the other eight members of the MPC voted to leave borrowing costs on hold until August. |
| 12.02pm BST | 12.02pm BST |
| 12:02 | 12:02 |
| Sterling surges after Bank leaves interest rates on hold | Sterling surges after Bank leaves interest rates on hold |
| The pound is surging!! | The pound is surging!! |
| It’s up by two cents against the US dollar, to $1.336, following the surprise decision to leave interest rates at 0.5%. | It’s up by two cents against the US dollar, to $1.336, following the surprise decision to leave interest rates at 0.5%. |
| £: Fly-hitting-a-windscreen formation. pic.twitter.com/Yq239LmoM7 | £: Fly-hitting-a-windscreen formation. pic.twitter.com/Yq239LmoM7 |
| Updated | Updated |
| at 12.03pm BST | at 12.03pm BST |
| 12.00pm BST | 12.00pm BST |
| 12:00 | 12:00 |
| BANK OF ENGLAND INTEREST RATE DECISION | BANK OF ENGLAND INTEREST RATE DECISION |
| Breaking news! The Bank of England has left interest rates unchanged, dashing expectations of a rate cut. | Breaking news! The Bank of England has left interest rates unchanged, dashing expectations of a rate cut. |
| More to follow! | More to follow! |
| 11.55am BST | 11.55am BST |
| 11:55 | 11:55 |
| FIVE MINUTES TO GO...... | FIVE MINUTES TO GO...... |
| Currently the pound is trading at $1.323 against the US dollar, up almost a cent today. | Currently the pound is trading at $1.323 against the US dollar, up almost a cent today. |
| And the FTSE 100 is up 62 points, or almost 1%, at 6732. | And the FTSE 100 is up 62 points, or almost 1%, at 6732. |