No-Deal Brexit: Bank of England cuts growth expectations
The Bank of England cut its growth forecasts in the face of increased Brexit worries and a slowing global economy, says a Reuters report early Thursday morning. The bank gave no indication it was considering lowering interest rates like other central banks in developed countries.
This was done just a day after the U.S. Federal Reserve reduced rates for the first time since the global financial crisis. BoE said it still expected to raise borrowing costs gradually but also noted that it is hinged on a global pick-up as well as a “smooth” Brexit, something that is not at all guaranteed for now.
The BoE’s Monetary Policy Committee (MPC) voted 9-0 to keep rates unchanged at 0.75%, but the bank said rates could move either way, whatever form Brexit takes. Markets see increased risks of a disorderly, no-deal Brexit with new Prime Minister Boris Johnson committed to taking Britain out of the European Union on Oct. 31.
BoE’s confessions among other things said that the situation on hand now led to a marked depreciation of the sterling exchange rate which is now seen as near a three-year low.
The bank report reveals that "Underlying growth appears to have slowed since 2018 to a rate below potential, reflecting both the impact of intensifying Brexit-related uncertainties on business investment and weaker global growth on net trade."
By Jude Chukwuemeka