Central banks

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  • 12 May 2020, 09:19
    Negative rates in the UK ‘quite possible,’ BOE deputy governor says

    CNBC reports that according to Deputy Governor for Monetary Policy Ben Broadbent, the U.K. may be headed toward negative interest rates at impending Bank of England monetary policy meetings.

    The BOE's Monetary Policy Committee (MPC) voted to hold interest rates at a historic low of 0.1% last Thursday, having cut rates twice from 0.75% since the start of the coronavirus pandemic.

    "The committee are certainly prepared to do what is necessary to meet our remit with risks still to the downside," Broadbent told CNBC on Tuesday.

    "Yes, it is quite possible that more monetary easing will be needed at the time."

    Along with the two previous rate cuts, the Bank has also announced £200 billion of new quantitative easing, bringing its bond buying program to a total of £645 billion.

  • 7 May 2020, 09:08
    BOE governor Bailey: We are not out of monetary policy tools

    • We will continue to come up with appropriate responses

    • BOE is clearly committed to take action when needed

    • Appropriate that BOE continues with aggressive pace of QE for the moment

    • We will take stock of that, there's still another meeting before QE completion

    • Information about lifting lockdown measures will be material to June discussions

  • 7 May 2020, 06:15
    Bank of England leaves bank rate unchanged at 0.10%

    • The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. In that context, its challenge is to respond to the severe economic and financial disruption caused by the spread of Covid-19.

    • At its meeting ending on 6 May 2020, the MPC voted unanimously to maintain Bank Rate at 0.1%.

    • The Committee voted by a majority of 7-2 for the Bank of England to continue with the programme of £200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, to take the total stock of these purchases to £645 billion.

    • Two members preferred to increase the target for the stock of asset purchases by an additional £100 billion at this meeting.

    • The spread of Covid-19 and the measures to contain it are having a significant impact on the United Kingdom and many countries around the world.

    • Activity has fallen sharply since the beginning of the year and unemployment has risen markedly.

    • Economic data have continued to be consistent with a sudden and very marked drop in global activity.

    • Oil prices have been volatile.

    • There have, however, been tentative signs of recovery in domestic spending in China, and this is likely to be echoed in other countries that have started to relax Covid-related restrictions on economic activity.

    • Financial markets have recovered somewhat over recent weeks and risky asset prices have picked up from their lows in mid-March. This in part reflects the actions taken by authorities in the United Kingdom and elsewhere. Global financial conditions have, nevertheless, remained tighter than prior to the outbreak of Covid-19.

    • The timeliest indicators of UK demand have generally stabilised at very low levels in recent weeks, after unprecedented falls during late March and early April.

    • Payments data point to a reduction in the level of household consumption of around 30%.

    • Consumer confidence has declined markedly and housing market activity has practically ceased.

    • CPI inflation declined to 1.5% in March and is likely to fall below 1% in the next few months, in large part reflecting developments in energy prices.


    GBP/USD jumps to 1.2380 post-BoE announcement.
  • 15 January 2020, 09:00
    BOE's Saunders: Aggressive steps needed given limited monetary policy space

    • Growth has slowed markedly over the last year, both overseas and here.

    • In the UK, the economy has barely grown since the first quarter of last year and the YoY growth in GDP has fallen below 1% for the first time since 2012

    • It probably will be appropriate to maintain an expansionary monetary policy and also to possibly cut rates further

    • Neutral level of interest rates may have fallen further over the last year or two

    • Monetary policy space is limited

    • Risk considerations favour a relatively prompt, aggressive response to downside risks

    • Most likely outlook is a further period of subdued growth

    • Brexit uncertainty may continue, weigh further on the economy

  • 10 January 2020, 10:40
    BoE's Tenreyro inclined to back rate cut if risks emerge

    Bank of England policymaker Silvana Tenreyro said she will be inclined to vote for a cut in interest rates, if the economy does not pick up this year as the central bank forecast in November.

    The BoE's forecasts assumed that the Britain would move towards a deep free trade agreement with the EU this year, and that the recent global economic uncertainty quickly unwound.

    "The risks to these assumptions are largely to the downside," Tenreyro said in a speech at the Resolution Foundation think tank in London.

    "If uncertainty over the future trading arrangement or subdued global growth continue to weigh on demand, then my inclination is towards voting for a cut in Bank Rate in the near term," she continued.

  • 9 September 2019, 09:39
    BOE policymaker Vlieghe: Interest rates likely to stay lower for years

    • Structural forces unrelated to monetary policy are likely to keep rates low

    • BOE unlikely to be able to cut rates as it did in the previous downturn

    • BOE analysis rules out taking rates into negative territory

    • Does not believe that a recession is overdue

    • Not much room for the UK gilt yields to fall much further, so more QE unlikely to provide much more stimulus.

    • BOE firepower is less than before previous recessions.

    • If you change BOE 2% inflation target, could create higher perceived risk that it will be changed again in future.

    • Helicopter money could put central bank independence at risk.

  • 13 May 2019, 08:09
    BoE Deputy Governor Broadbent: Doesn't know which way rates would go in case of a messy no-deal Brexit

    • delay in Brexit deadline to October will have a negative impact on investments.

    • Investment already feeling the consequences of uncertainty.

    • If Brexit deal is struck, there could be quite a strong rebound in investment.

    • any BOE rate hikes will be gradual.

    • Haven't decided whether to apply to succeed Carney as BoE Governor.

  • 9 May 2019, 09:19
    BOE MPC member Saunders: Sterling would probably fall after no-deal Brexit

    • UK has missed out on 2-3 year of business investment on Brexit

    • smooth Brexit transition would probably boost investment

    • Brexit deal would help economic outlook

    • series of repeated Brexit cliff edges could cause investment to be subdued for a while

    • UK real incomes have picked up in past year

    • UK neutral rate is a lot lower than in the past

    • estimates neutral rate is about 2%

    • I would expect interest rates will go a bit higher over time, but it won’t be far of fast

  • 26 February 2019, 10:39
    BoE’s Vlieghe: pay growth not putting upward pressure on CPI

    • appropriate pace of monetary tightening is somewhat slower than I judged it to be a  year ago

    • on balance, after no-deal Brexit likely to keep policy on hold or ease

    • direction of rate moves after no-deal Brexit will be trade off between supporting economy and stopping temp inflation overshoot

  • 26 February 2019, 10:21
    BOE governor Mark Carney: gradual hikes needed if economy performs as expected

    • will provide all stimulus possible after no-deal Brexit, subject to price stability

    • fundamentals of the UK economy are sound

    • Brexit creating tensions for consumers, businesses

    • no-deal Brexit will be inflationary

    • BOE won't reduce QE holdings until rate reaches at least 1.50%


    GBP / USD continued its growth amid Carney’s comments and reached January 28 high

  • 14 February 2019, 09:42
    BOE MPC member Vlieghe: there is considerable uncertainty around my forecast for policy rate path
    • if Brexit deal is done, around one quarter-point rate hike a year is reasonable central case

    • in no-deal Brexit scenario, an easing or extended pause in monetary policy more likely to be appropriate than tightening

    • degree of future monetary tightening will in part depend on how large sterling’s appreciation after a Brexit deal is

    • signs of economic slowdown in early 2019 means a lot needs to go right for this forecast to come to pass

    • I can probably wait for evidence of growth stabilising, inflation pressure rising before considering rate hike

  • 7 February 2019, 12:51
    Carney: not everything on Brexit may be tied up by end of march

    • We have projected that Brexit uncertainty will last longer than we expected

    • There is upside for UK economy if there is clarity on brexit deal sooner

    • If there is a no-deal Brexit shock, that would increase chance of a negative quarter of growth

    • Central expectation is that we will have higher uncertainty but some kind of Brexit arrangement

    • Core of UK financial system ready for whatever form Brexit takes

  • 7 February 2019, 12:39
    BOE governor Mark Carney: No-deal Brexit could mean substantial economic contraction

    • Economy as a whole is not yet prepared for a no-deal Brexit

    • Fog of Brexit is causing short-term volatility in economic data

    • Brexit uncertainty hitting housing market, consumers

    • Businesses are seen building up stockpiles as Brexit contingency planning

    • It Would Be Remarkable If Current Level Of Sterling Is Consistent With Final Brexit Outcome

    • Cannot Predict Path Of Monetary Policy After Brexit

    • BoE Assumes Uncertainty Remains Elevated For A While

    • Further rise in uncertainty could push inflation below 2%

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