newsmoments.net
newsmoments.net May 27, 2018


The Bank Of England Turns Dovish In May And Walks Away

11 May 2018, 04:19 | Sheila Mcguire

Seven monetary policy committee members voted to hold rates at 0.5 per cent at the May meeting, while two wanted an immediate quarter-point rise.

This underwhelming start to 2018 also saw the BoE make some revisions to its growth forecasts for the year, with the bank now expecting the United Kingdom economy to expand 1.4% in 2018, rather than the 1.8% growth it had forecast back in February.

However, recent economic activity - which paints a weaker picture - has meant they have instead kept the rates at 0.5%, with a member vote of 7 to two.

The rise in the oil price, now up over 50% since September last year, hasn't as yet prompted a re-evaluation in this year's economic forecasts but as can be seen from recent weak consumer data, in Europe, the United Kingdom, as well as the U.S., it could well be starting to have an effect in some of the more recent retail sales numbers.


Failure by the Bank of England to increase interest rates will be storing up problems for how we cope with a future recession, an economist has said.

Instead, figures showed the economy barely grew in the first three months of the year and inflation fell by more than anticipated.

In recent months, the prospect of an interest rate rise by the Monetary Policy Committee (MPC) has been considered an nearly sure thing.

As the Bank now sees inflation clocking in at just 1.4% in 2018, as opposed to the 1.8% growth forecast in February, this encouraged investors to pile out of the Pound. We expect an acknowledgement from Carney that economic conditions have worsened since the last meeting in March, while there is a good chance that we'll see a downward revision in the 2018 growth forecast, although this may be largely priced in.


"Unfortunately, their patience will now be tested once again, as they will have to keep waiting for base rate to increase", she said. Only a week later, the first quarter GDP (gross domestic product) print came in at a tepid 0.1 percent quarter on quarter, below consensus of 0.4 percent and the BOE's own forecast of 0.3 percent. Inflation has fallen after reaching its highest in more than five years in late 2017, but at 2.5 per cent it is still well above the BoE's 2 per cent target. The currency was trading on a low against the dollar of $1.3499 before easing to relative levels.

The pound has been displaying a very all or nothing attitude towards BoE monetary policy suggesting that investors are looking for much more clarity from the central bank.

Particular focus will likely be placed on the UK's latest earning figures, with a possible uptick in wage growth likely to be seen as an indication that the United Kingdom economy may begin to pick up steam again in the second quarter. It indicates where the BOE sees inflation in the following years.

Britain's economy grew more slowly than most of its peers previous year after a Brexit-driven jump in inflation hit consumer spending power and some businesses delayed long-term investment.




Other News

Trending Now

Abortion outlawed in USA state of Iowa
Planned Parenthood is Iowa's largest provider of abortions but does not have a Sioux City office. Kim Reynolds will sign the fetal heartbeat bill, Senate File 359 at 3 p.m.

Google bans abortion ads ahead of Irish referendum
TECH GIANTS Google and YouTube have declared that they will ban all ads relating to the upcoming referendum on abortion . Google is now showing a range of ads about the Irish referendum, which will take place on 25 May.

Wisconsin man celebrates eating his 30000th Big Mac
His achievement was acknowledged by Guinness World Data in 2016 when he was tallied in at 28,788 Massive Macs. Over the past 44 years, Gorske has only gone eight days in total without consuming a Big Mac.

UK Defense Ministry Acknowledges Civilian Casualties in Syria Airstrike in March
It has also has prompted a warning from Labour of the dangers of striking targets "with high levels of civilian activity nearby". It said that RAF has carried out more than 1,600 aerial attacks in Iraq and Syria, second only to the US.

WA experiencing triple zero emergency call issues following Telstra cable cut
Phone systems are also being impacted, with landline and mobile services impacted. "We are deeply sorry for the interruptions". They said they are working to restore services as soon as possible, but WA is now still experiencing some interruptions.

Blankenship Concedes W. Virginia Primary - Morrisey Projected Winner
Trump is citing Alabama Republican Roy Moore, who lost a special Senate election after allegations of past sexual misconduct. It's going to be a long ride", Robert Rupp, a political history professor at West Virginia Wesleyan College, said Wednesday.

Bitcoin price retreats from $10k after Bill Gates and Warren Buffett bashing
CME Group, the world's leading financial market firm, also launched its own Bitcoin futures contracts on December 17th, 2017. Gates, retired from his Microsoft role, now works with another cryptocurrency critic, legendary investor Warren Buffett .

Group video calls are finally coming to WhatsApp
WhatsApp's CEO is leaving their parent company Facebook citing disagreements with their management of user data. And I'll still be cheering WhatsApp on - just from the outside.

A unified Korean table tennis team to compete in Sweden Video
Yesterday's match marked the first time North and South Korea competed as one team since the 1991 tournament in Chiba, Japan. Hyun Jung-hwa of South Korea and Li Bun-hui of North teamed up to win against crowd favourites China.

Amazon will expand its Boston tech hub with 2000 new jobs
In January , it wrote, "By Amazon's choice, this is a public auction, so you should conduct this deal out in the open". Amazon's current Boston technology employees mostly work on Alexa, Amazon Web Services and Audible, the company said.