020 7898 0500Since Brexit became reality, the UK has experienced a weakened currency, pessimism surrounding the economy and a cut in interest rate along with further quantitative easing (QE), but more recently very positive data readings. This made yesterday’s Bank of England (BoE) quarterly inflation report highly anticipated. With question marks now starting to emerge about the time of the recent rate cut and the additional QE, it was a chance for the Treasury Select Committee to quiz BoE Governor Carney about the rationale surrounding the decision.
Carney, along with fellow monetary policy committee members, testified before the Treasury Select Committee. Carney defended the actions of the Central Bank and highlighted that one of the reasons for the improvement in the labour market was due to the actions of the BoE. In addition, the door was left open for further rate cuts and further additional QE if the economy required it. Carney went on to say that while he “welcomed signs of stabilisation in the UK economy” it was important to keep the economic impact in perspective as he estimates that the UK economy is currently growing at around half the rate it was ahead of the EU vote. As a result of Carney’s tone we saw sterling lose some of the gains it had made in past few days.
The day ahead is quiet in terms of economic data from the UK. However, all eyes will be on the European Central Bank (ECB) meeting today which could have an effect on the way sterling trades, especially as we could hear rhetoric that blames the Brexit referendum for a partial slowdown in the region. Ultimately what happens in Europe can affect the economic activity in the UK.
