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Bank of England leaves interest rates unchanged and raises growth and inflation forecasts – business live Bank of England's Mark Carney says he has Theresa May's full support – business live
(35 minutes later)
1.26pm GMT
13:26
Carney: Consumers aren't being stupid
Q: Are consumers being short-sighted and stupid by still spending, and not realising how difficult things are going to get?
Not at all - people still have jobs, and are behaving rationally, Mark Carney replies.
1.24pm GMT
13:24
Carney: “We don’t feel under any political pressure from the govt. PM & govt fully support monetary policy framework we have in place.”
1.21pm GMT
13:21
Carney: I've got Theresa May's full support
Carney is then asked whether Theresa May’s recent criticism of the Bank’s monetary policy, at the Tory party conference, has undermined him.
Not at all, he replies.
We don’t feel under any pressure from the government, and especially not from the prime minister.
The prime minister, and the government, fully support the monetary policy framework we have in place.
1.16pm GMT
13:16
Hugo Duncan of the Daily Mail tries to get some new forward guidance out of the governor.
Q: Can you tell us whether the next move in interest rates is more likely to be up, or down?
You can see scenarios where it goes either way, we don’t have a bias, Mark Carney replies.
But the monetary policy committee currently unanimously believes that the present stance is right.
Updated
at 1.20pm GMT
1.16pm GMT
13:16
1.14pm GMT
13:14
Q: If the Brexit process isn’t completed by 2019, might you stay on longer?
Carney repeats that we’ve had enough talk about his future.
And he then warns that today’s court ruling on article 50 is just one example of the “series of events” that will take place as Britain leaves the EU, creating uncertainty.
Everything doesn’t come together until relatively late in the process, and those effects will be there in the economy.
1.14pm GMT
13:14
Q: Should families who are just getting by be worried about your inflation forecasts [hitting 2.7% in 2017]?
We expect inflation to go up, Carney states bluntly, and that will hit people in the pocket.
But he then flags up that the Bank expects wage growth to be stronger by 2020.
There’s a difficult period here, but it has to be put into context.
Carney: expect inflation to rise. must make judgment on how fast get it back to target at time when econ abt to undergo big transition
1.09pm GMT
13:09
Q: How much would the pound have to fall, and how fast, to concern you - and would you intervene in the currency markets?
Carney says the BoE doesn’t target the sterling exchange rate, but it isn’t ‘indifferent’ to it.
1.06pm GMT
13:06
Ben Chu of the Independent takes the governor back to the recent criticism from pro-Brexit MPs, and the claim from former foreign secretary William Hague that central bankers had lost the plot.
Q: Is this undermining Bank independence, and should your critics take a vow of silence?
Carney grins, and slips into Canadian as he mutters “Jeez, It’s a trap”.
He then says there is a robust mechanism of accountability, including regular appearances before parliamentary committees.
The debate should be as ‘vigorous’ as necessary. And it’s important that the MPC recognises the limits of its responsibilities, he adds.
Carney asked if sniping at governor by MPs undermines independence of central bank. Under his breath says "Jeez, it's a trap"
Debate about what Bank does "can be as vigorous as people want" says Mark Carney - seems unbothered by Bexiteer critics
Updated
at 1.08pm GMT
1.01pm GMT
13:01
Q: Three months ago the Bank made major downward revisions to its growth forecasts, and today it’s made major upward revisions. So is there a problem with your forecasting?
Carney argues that we shouldn’t get carried away with short-term revisions.
Broadly speaking, the size of the UK economy is still expected to be roughly the same in two or three years as we thought in August.
Basically, Carney is saying the BoE has learnt from the past three months that it was right all along.
Deputy governor Ben Broadbent weighs in too, saying that most independent forecasters expected the economy would contract after the Brexit vote. That was more negative (and thus wronger) than the Bank’s own forecasts.
12.56pm GMT
12:56
Carney won't discuss staying beyond 2019
Q: Could you be persuaded to stay at the Bank of England beyond 2019, if things are going well?
I think we’ve all had enough of that saga, Carney shoots back, in an attempt to keep talk of his future nailed down [reminder, on Monday he agreed to serve one more year, until June 2019]
Carney asked about his future, and could you stay an extra 2 years: "I think we have all had enough of that saga so let's not reopen it"
Q: Does the recent news storm over your future show that the relationship between the government and the Bank needs to change?
Carney argues that the current system, in which the government hands control of monetary policy to technocrats such as himself, is working.
“I don’t think the framework needs to change, i think it works quite well”
Mark Carney praises macro framework of the Bank of England and the "clear designation" of responsibility to technocrats...
12.53pm GMT12.53pm GMT
12:5312:53
Q: UK bond yields are up sharply since your stimulus package in August, so has it failed - and has monetary policy shot its bolt?Q: UK bond yields are up sharply since your stimulus package in August, so has it failed - and has monetary policy shot its bolt?
No, Carney replies. He argues that the Bank could still buy more British gilts if needed.No, Carney replies. He argues that the Bank could still buy more British gilts if needed.
12.51pm GMT12.51pm GMT
12:5112:51
Carney denies that the Bank has got ahead of itself and been “presumptuous” by trying to predict the kind of Brexit deal that Britain will end up with.Carney denies that the Bank has got ahead of itself and been “presumptuous” by trying to predict the kind of Brexit deal that Britain will end up with.
Carney on what kind of Brexit UK will get: negotiations not begun and "it's all to play for"Carney on what kind of Brexit UK will get: negotiations not begun and "it's all to play for"
@bankofengland Carney says made no change to hard/soft Brexit assumptions but hit to supply comes through harder later.@bankofengland Carney says made no change to hard/soft Brexit assumptions but hit to supply comes through harder later.
UpdatedUpdated
at 12.53pm GMTat 12.53pm GMT
12.50pm GMT12.50pm GMT
12:5012:50
Q: The bank has cut its growth forecasts for 2018, so is the pain of Brexit simply being delayed?Q: The bank has cut its growth forecasts for 2018, so is the pain of Brexit simply being delayed?
Carney replies that the Bank sees “very modest real income growth” in 2017 and 2018, as inflation eats into wages.Carney replies that the Bank sees “very modest real income growth” in 2017 and 2018, as inflation eats into wages.
12.45pm GMT
12:45
Carney: Article 50 ruling adds to uncertainty
Onto questions....
Q: Does this morning’s court Article 50 court ruling [saying parliament must vote on the issue] add to the uncertainly overshadowing the UK economy?
It is an example of the uncertainty that will characterise this process, Carney replies.
The negotiations haven’t even begun. There will be volatility as those negotiations proceed. I see it as one of the examples of that uncertainty.
Updated
at 12.46pm GMT
12.43pm GMT
12:43
Some instant reaction:
Bank of England governor Carney presenting latest forecasts: UK is highly flexible, dynamic economy
Carney #BoE in short - don't expect rates to change much chaps - so more of the same - not apt to alter policy much.
Shorter Carney - we were too pessimistic about the economy.
12.42pm GMT
12:42
In conclusion, Carney says that Britain has a dynamic, flexible economy, and that will help it handle the Brexit process.
12.42pm GMT
12:42
Carney says that the Bank of England can look through the prospect of inflation jumping over its target, for the wider good of the economy.
Shorter Carney: You want higher prices or fewer jobs?
But it cannot ignore inflation indefinitely.
12.39pm GMT
12:39
The fall in sterling appears to reflect market expectations that Britain will have a ‘less open’ trading relationship with Europe, Carney continues.
The governor warns that the slump in the pound will have more significant implications for inflation than for growth [in other words, it’s a net negative].
The fall in sterling will have more significant implications for inflation than str growth for the rest of 2016- #BOE's Carney
And Carney then warns that people are going to be hit in the pocket, saying:
Modest supply growth ultimately means lower real income growth.
12.36pm GMT
12:36
12.36pm GMT
12:36
The stimulus package announced by the Bank of England in August is working, Carney declared.
He says credit is widely available, mortgage borrowing costs are lower, and unemployment is still low.
But... financial markets have taken a ‘less sanguine’ view of Brexit, he adds, pointing to the slump in the pound (down around a sixth since the referendum), and rising UK bond yields (a measure of government borrowing costs.
12.33pm GMT
12:33
Mark Carney's press conference begins
Mark Carney begins by telling reporters that the terms of Britain’s exit from the EU is the most important single factor affecting the UK economy.
That UK’s new relationship with the EU will be the “biggest driver” of medium-term prosperity, he adds.
And he points out that economic demand has been stronger than expected in August.
12.31pm GMT
12:31
The Bank of England is holding a press conference right now.
You can watch it here.
12.30pm GMT
12:30
Pound heads towards $1.25
Sterling has hit a new three-week high, and is now up almost two cents at $1.249.
Traders are calculating that there is less chance of the BoE cutting interest rates further.
Indeed, the Bank of England now points out that it could raise rates, not cut them, in future:
It says:
Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.