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BOE: upbeat on growth, downbeat on Brexit

Thursday, February 02, 2017 - 01:34

Sterling and UK government bond yields tumbled on Thursday after the Bank of England appeared to be in no rush to raise interest rates and - despite raising its growth forecasts - flagged the risks posed by Britain's departure from the European Union. David Pollard reports.

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No sign yet Brexit's snuffing out the British economy ... If anything, the flame brighter - according to the Bank of England - and despite its own predictions. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "Growth has remained resilient since the referendum, with the UK posting the fastest rate in the G7 last year. The MPC expects growth to be stronger ....." From 1.4 per cent previously, the Bank now forecasting a two per cent rate that surprised many. Though Carney confessed strong consumer demand surprised the Bank. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "After an initial wobble .... it bounced back pretty quickly." But he still holds doubts. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "The Brexit journey is really just beginning. While the direction of travel is clear, there will be twists and turns along the way." And if a pick-up in growth is welcome, overheating inflation won't be. The Bank forecasting 2.8 per cent at the start of next year - some in the markets tip three per cent or more. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "The real question is: are business going to continue to invest? And the second one is: with rising inflation, is the consumer going to feel that the pound in their pocket is really suffering and real disposable incomes, instead of rising, stall or even fall?" This week's vote in parliament puts the UK government a step closer to launching EU divorce proceedings. Markets seeing through the upgraded growth outlook to hints, perhaps, the Bank's nowhere ready to hike rates just yet. Policy left on hold at this meeting - but a Brexit-battered pound falling sharply during it.

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BOE: upbeat on growth, downbeat on Brexit

Thursday, February 02, 2017 - 01:34