Monday 19 August 2019

BoE boss issues new no-deal warning

Mark Carney speaking at the Bank of England interest rate decision (Chris J Ratcliffe/PA)
Mark Carney speaking at the Bank of England interest rate decision (Chris J Ratcliffe/PA)

David Chance

The Bank of England left its key interest rate unchanged yesterday at 0.75pc in a unanimous decision, but signalled a new dovish tinge to its outlook, saying borrowing costs may not need to rise by as much as previously assumed.

The central bank, which has been faced with a plunging pound, to 91.3p against the euro, suggested that just one rate rise to 1pc would likely suffice, rather than the two it had put in play in May. Governor Mark Carney predicted more grief to come in the event of a no-deal Brexit.

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"In the event of a no-deal, no-transition Brexit, sterling would likely fall, the risk premiums on UK assets would rise and volatility would spike higher," he said in a press conference.

Many economists say that the pound could fall to parity with the euro if there is no deal with the EU. The bank cut the UK's growth outlook to 1.3pc for this year and next, down from 1.5pc and 1.6pc respectively.

Irish Independent

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