Bank of England warns Brexit uncertainty is hurting the economy – as it happened
UK central bank warns that big economic decisions are already being delayed by uncertainty over the EU vote, as it leaves interest rates on hold yet again
6.10pm BST
In another volatile day, leading shares fell back as concerns about the effect of a Brexit vote grew, along with nervousness after the US Federal Reserve expressed caution about the global economy.
But markets came off their lows, helped by a recovery on Wall Street and despite continuing weakness in the oil price, with Brent crude down more than 3%.
5.57pm BST
Bank of England governor Mark Carney has cancelled his planned speech on fintech at the Mansion House tonight following the terrible attack on MP Jo Cox. The Bank said:
In the light of the dreadful attack today on Jo Cox MP the Governor of the Bank of England, Mark Carney, will no longer be delivering the planned speech at Mansion House. The Governor will be attending the event and will now deliver a short speech reflecting on today's events.
5.21pm BST
Over in Greece, the country is likely to get the formal go-ahead for a a7.5bn loan tranche on Friday, after it met all the requirements demanded by creditors.
Eurogroup president Jeroen Dijsselbloem said Greece had met all the prior actions necessary, while the country's finance minister Euclid Tsakalotos said the first review of Greece's bailout programme was now essentially completed.
I appreciate that for many Greeks things are still very difficult, since we passed a lot of difficult measures. I feel a need to say that the next year must not just be the year when we exit the crisis through growth, but a time when we place emphasis on the qualitative aspects of this growth.
4.50pm BST
The market worries about the UK leaving the EU may be overdone, says Julian Jessop at Capital Economics:
Nervousness about Brexit has obviously been having an increasing impact on sentiment in global markets. This is perhaps seen most clearly in the strong performance of safe havens such as the Japanese yen and the price of gold, which have been tracking the latest referendum odds closely. However, this may not last much longer - for three main reasons.
First, to some extent the nervousness in the markets simply reflects the fact that no-one yet knows the result of the referendum on the 23rd, which is too close to call...
Regardless of which way #EUref vote goes, whether it is won by big or small margin will have implications. (1/2) pic.twitter.com/oNjVjjGoqw
4.34pm BST
But the pound has recovered from lows after England won the Euro 2016 match against Wales. Coincidence? Or was it that brokers were watching the match and weren't around to halt the slide?
Cable snaps back after Euro 2016 game ends https://t.co/hZzNnPXWWB #forex, #forextrading
FTSE 100 cheers for England: Traded 5,915 at kick-off,
5,918 when Wales scored, 5,920 after England win and 5,962 as fans celebrate. #ENGWAL
4.29pm BST
Sterling is under pressure, shares are falling, oil and base metals are down, but gold continues to be a haven for investors.
Gold has jumped from $1292 an ounce to $1311, a near two year high, on worries about Brexit, as well as the US Federal Reserve's caution about the global economy.
4.26pm BST
A survey of companies finds 35% of them think that the UK leaving the EU would be harmful, writes Katie Allen:
A third of businesses in the UK think Brexit would be bad for the economy, according to a poll that also shows company bosses in London and Scotland are most worried about a vote to leave the EU in next week's referendum.
The survey of 3,394 business owners and finance directors found those in the Midlands, east of England and northern England were the most optimistic about Brexit being helpful to the economy.
Related: A third of UK businesses think Brexit would be bad for economy
4.09pm BST
Despite the poll lead for the Leave campaign, some spread betting clients appear to take the opposite view, according to Spreadex financial analyst Connor Campbell:
Interestingly for all the Brexit-fear currently plaguing the markets, Spreadex has seen a consistent trend of clients opting to put their money behind the Remainers. In both size and frequency of bet choosing to stay in the EU has come out on top, that support by and large continuing throughout the last fortnight despite the deluge of polls having Vote Leave pulling ahead. Of course this is no guarantee that Britain will still be in the EU come Friday 24 June. However, in the run up to the general election last year Spreadex's clients consistently backed a Conservative majority even as the polls predicted the tightest race in decades, so it isn't hard to imagine a similar outcome this time around.
3.03pm BST
Britain leaving the EU would not have a direct effect on the Russian economy, said the country's central bank governor Elvira Nabiullina, repeating comments she made a week or so ago.
In an interview with CNBC (transcript here ) ahead of her appearance at the St. Petersburg International Economic Forum, she said foreign investors' perception of the Russian economy has improved.
2.58pm BST
In line with other global markets, US shares have come under pressure on fears of Brexit and the Federal Reserve's caution about the global economy.
The Dow Jones Industrial Average is down 130 points or 0.7%, while the S&P 500 opened 0.38% lower and Nasdaq down 0.5%.
1.55pm BST
Meanwhile there have been some mixed economic numbers from the US.
Consumer price inflation rose 0.2%% in May, down on the April figure of 0.4%. Analysts had expected a rise of 0.3%. Core inflation was unchanged at +0.2%
The dollar fell in the immediate aftermath of the releases while stock index futures also declined.
Referendum or no referendum, there's a growing feeling that the Fed has lost the plot when it comes to monetary policy. The US central bank switches from dovish to hawkish and back again with worrying regularity and has thrown the notion of "data dependence" out of the window. It is becoming obvious to an increasing number of investors that the Fed cannot bring itself to raise rates, yet is taking all measures to attempt to hide this fact from the market. It's in a corner where hiking raises the prospect of a violent stock market sell-off, whereas a failure to tighten monetary policy suggests deep-rooted economic problems.
1.47pm BST
The continuing uncertainty over a possible Brexit, with polls continuing to show the Leave campaign on the front foot, has sent London's leading shares to their lowest level since the middle of February.
The FTSE 100 is currently down 0.9% at 5911, a low not seen since February 17. As well as Brexit, the cautious comments from the US Federal Reserve about the global economy are also having an impact.
1.19pm BST
Still on interest rates, economist Sam Alderson at the Centre for Economics and Business Research said:
In the absence of a vote to leave later this month, interest rates look unlikely to change for some time to come. Given a generally softening domestic economy and relatively gradual recovery in inflation, we wouldn't expect the MPC to raise rates until the middle of 2017 at the earliest. However, the currency impact of a leave vote is likely to have a notable impact on the outlook for inflation. This in turn will clearly affect the Bank's monetary policy stance in the months that follow.
1.16pm BST
UK interest rates would be cut close to zero in the event of a vote to leave the EU, says RBC Europe's senior UK economist Sam Hill:
The minutes continue to be non-committal on the direction of a change in monetary policy following a Leave vote even though the Committee acknowledge it could "materially alter the outlook". Although the MPC only go as far as saying the direction of any move in policy "will depend on the relative magnitudes of the demand, supply and exchange rate effects" we are of the view that Bank Rate would be cut "towards zero" in the event of Brexit. Any short-term spike in inflation following a decline in the exchange rate we would expect to give way to downward pressure on inflation in the medium term - which is the MPC's policy-relevant horizon - as weak demand is likely to weigh on output.
The one change [in the minutes] which was discernable was an increased emphasis on the international implications. Firstly on referendum uncertainty ("The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets.") and secondly on the event of a Brexit outcome ("Through financial market and confidence channels, there were also risks of adverse spillovers to the global economy."). There was also reference to a further fall in sterling "perhaps sharply" in a Leave scenario but in the grand scheme of things these minutes don't add much to what the MPC has already said on the EU referendum.
1.08pm BST
Here's our report on the Bank of England comments:
The Bank of England has issued a fresh warning that a vote to leave the EU in next week's referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy.
Against the backdrop of jittery financial markets, the Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.
Related: Bank of England: economy will be hit hard if Britain leaves EU
1.05pm BST
But alternatively, a remain vote could mean a rate rise, some believe:
#MPC gives strong warning on #Brexit risks in today's minutes. But a vote to stay would in our view make a turn-of-the-year rate hike likely
12.57pm BST
Some economists believe the Bank of England would slash interest rates to fresh record lows if the UK votes to leave the EU next week.
James Knightley of ING predicts an emergency rate cut on Friday if the Leave campaign wins:
In the case of Brexit, there is a high probability that inflation rises sharply as a result of currency weakness, but we think that the BoE will look through this, as they did in 2011. Instead we think the focus will be on the growth risks and financial market turbulence, which would dampen domestic inflation pressures over the medium term.
Consequently, we would expect a 25bp rate cut on June 24th.
"It is likely that if the UK votes to leave the EU, the MPC will cut base rate in an attempt to stabilise the economy.
Though this could lead to an increase in inflation due to the depreciation of Sterling, the Bank is likely to be willing to trade that off against trying to maintain economic growth and avoid the risk of increasing unemployment.
12.52pm BST
Liberal Democrat leader Tim Farron, a Remain campaigner, has welcomed the Bank of England's warning:
"This is yet more independent evidence that our economy could plummet if we leave Europe. We cannot afford to let people like Norman Lamont crash the economy for a second time. This is not a political parlour game - people's jobs, homes and businesses are at risk."
12.35pm BST
The pound has fallen since the Bank of England minutes hit the wires.
It has lost one cent against the US dollar to hover around $1.41, near to a two-month low.
12.27pm BST
Bank of England isn't pulling its punches. pic.twitter.com/G5eU9w4J7E
12.22pm BST
The Bank of England's policymakers heard plenty of evidence that the UK economy has weakened due to next week's referendum vote.
The minute of the MPC meeting state that:
In the corporate sector, this included a sharp decline in the value of commercial real estate transactions and M&A, and reports of delayed business investment.
Evidence from the Bank's Agents had suggested increased delays in corporate decision making, which was corroborated by a Deloitte survey of chief financial officers.
Minutes of @bankofengland attribute a fall in property and even car sales to referendum uncertainty. pic.twitter.com/GSqBaGVmFn
12.17pm BST
The full Bank of England minutes are here.
12.13pm BST
You can read a summary of the Bank of England's minutes yourselves, here.
12.12pm BST
The Bank of England appears to have hardened its Brexit warnings, despite pressure from the Leave campaign to cool things down.
Breaking: Bank of England strengthens its warnings on EU referendum risk - saying uncertainty could "spill-over" into global markets
Main #EURef related section of @bankofengland minutes today. Language similar to previous, if a little amplified pic.twitter.com/ytm4G6CZvM
12.10pm BST
The Bank of England has also issued a fresh warning that the pound will tumble in the event of a Brexit vote.
The minutes state that:
"On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling's exchange rate would fall further, perhaps sharply."
12.06pm BST
The Bank of England has warned that next week's EU referendum is already hurting the UK economy.
It says there are signs that major spending decisions are being delayed, such as car and house purchases, as consumers and businesses wait to see if the UK votes to leave the European Union.
The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.
While consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment
12.02pm BST
BoE policymakers were unanimous in leaving borrowing costs on hold, and also leaving the quantitative easing programme unchanged.
Bank of England maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at 375 billion...
...Minutes of the MPC meeting reveal unanimous vote on #BankRate and Asset Purchases
12.00pm BST
Breaking: The Bank of England has left interest rates unchanged at their record low of 0.5%, continuing a run dating back to March 2009.
And here come the minutes of the meeting.....
11.50am BST
10 minutes to go.....
Stand by for @bankofengland int rate decision/minutes. No doubt they'll warn abt Brexit impact (again). But will they go further than words?
11.24am BST
Bad news from Greece -- the unemployment rate has jumped to 24.9% in the first quarter of this year.
That's a rise from 24.4% in October-December.
11.12am BST
Indonesia just surprised the markets by unexpectedly cutting interest rates!
*BANK INDONESIA CUTS REFERENCE RATE TO 6.50% FROM 6.75%
11.10am BST
Consumer goods giant Unilever has become the latest UK company to encourage staff to vote Remain next week.
It has sent a letter to all 100,000 staff, signed by CEO Paul Polman and his three predecessors, saying the firm would be "negatively impacted" by Brexit, adding:
"We therefore hope that in the interests of Unilever, the UK,Europe, and indeed the wider global economy, the UK will choose to Remain and thereby continue to play a central role in Unilever's long-term growth and prosperity."
10.45am BST
The Bank of England have now published governor Mark Carney's letter to Leave campaigner Bernard Jenkin MP.
I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.
..Governor Mark Carney says no hits back in letter to Leave director @bernardjenkin criticises his "misconceptions" pic.twitter.com/KldisaYb2W
10.21am BST
The US Federal Reserve must take some blame for today's selloff.
Last night, the Fed cited weakening economic growth as one reason for leaving interest rates on hold.
There has been little to comfort investors over the past 24 hours, which is why yesterday's gains have withered on the vine. The Fed meeting was perhaps their best hope, but even here Janet Yellen was not able to offer much in the way of good news.
10.01am BST
After two hours of trading, every European stock market has lost ground.
Worries about the global economy, and central bankers' ability to stimulate growth, are hitting shares -- along with Brexit concerns.
The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion.
Sea of red on #Markets ahead of #BoE decision -will Mark Carney speak out against #EUreferendum again? Japan markets tumble 3% after no move
9.39am BST
Boom! UK retail sales jumped by 0.9% last month, beating forecasts of a 0.2% rise.
A surge in clothing sales led the recovery, according to the Office for National Statistics.
*U.K. MAY RETAIL SALES RISE 0.9%; MEDIAN EST. 0.2% GAIN
Notable rises in tinned food, duct tape, bottled water and shortwave radios.
Dear @ONS was the surge in UK Retail Sales due to purchases of tinned food and spades for digging underground shelters? #Brexit
9.35am BST
The European Central Bank has warned that Britain's referendum as a threat to the eurozone economy.
Downside risks continue to relate to developments in the global economy, to the upcoming British referendum on EU membership and to other geopolitical risks.
....the outlook for emerging market economies remains more uncertain as growth in China decelerates and commodity-exporting countries adjust to lower commodity prices.
9.21am BST
The pound is weakening this morning, but it's not a full-blown rout.
Sterling is down around half a cent against the US dollar at $1.415, and a similar amount against the euro at a1.256.
It is the first time since David Cameron pledged the referendum in January 2013 that Vote Leave have come out ahead in the respected monthly Ipsos MORI telephone survey, which is exclusive to the Evening Standard.
Immigration has overtaken the economy as the most important issue to how the public will vote, which is a significant boost to Boris Johnson and the Leave campaign.
LEAVE SENSATION: Our shock @IpsosMORI phone poll finds Remain six ponts behind https://t.co/8dgF0CQ0jN
Another 'why isn't sterling down more' moment.
9.08am BST
Just in.... a new opinion poll, putting giving the Leave campaign in the lead by 53% to 47%.
That's a significant turnaround compared with last month:
Significant collapse in REMAIN vote with LEAVE now on 53%, finds @IpsosMORI pic.twitter.com/gJaRF4Cxot
9.06am BST
All this criticism from the Leave campaign probably won't prevent the Bank of England from citing Brexit fears in the official minutes of this week's MPC meeting.
It would be odd, frankly, if they ignored it, given the recent volatility.
The FTSE could well see its losses intensify as the day goes on with the Bank of England set to stoke those Brexit-fearing fires later this morning with a firmer warning against leaving the EU (the central bank is also expected to unsurprisingly keep interest rates on hold).
Mark Carney faced a lot of criticism last time he expressed an opinion on the referendum, so expect an apoplectic reaction from Vote Leave (and perhaps another fall from the pound) as Thursday continues.
8.40am BST
Crumbs, the Bank of England is really under fire from the Brexit camp.
Bernard Jenkin MP, a director of the Vote Leave campaign, has written to governor Mark Carney warning him not to breach the pre-referendum "purdah" rules by talking about the referendum.
"All of the public comments that I, or other Bank officials, have made regarding issues related to the referendum have been limited to factors that affect the Bank's statutory responsibilities and have been entirely consistent with our remits."
*Serious* shade from Carney. https://t.co/L9iElg8xHl #EUref pic.twitter.com/WM770kCtAB
Great BBC scoop, confirmed by Bank of England https://t.co/zVct2tWcJO
8.34am BST
Prime minister David Cameron has leapt to the Bank of England's defence, after a volley of criticism from senior grandees.
Former chancellors Lord Lamont and Lord Lawson and ex-Tory leaders Iain Duncan Smith and Lord Howard accused the BoE, and the Treasury, of peddling "phoney forecasts" about the dangers of Brexit.
"There has been startling dishonesty in the economic debate, with a woeful failure on the part of the Bank of England, the Treasury and other official sources to present a fair and balanced analysis.
"They have been peddling phoney forecasts and scare stories to back up the attempts of David Cameron and George Osborne to frighten the electorate into voting Remain."
1/2. It's deeply concerning that the Leave campaign is criticising the independent Bank of England.
2/2. We should listen to experts when they warn us of the dangers to our economy of leaving the European Union.
8.15am BST
Mike van Dulken of Accendo Markets says:
Brexit fears continue to intensify a week out from the referendum, with the Federal Reserve again citing it as a headwind last night.
The markets struggling to shrug off risk aversion sending bond prices higher and yields ever lower or more negative.
#FTSE100 failure to conquer 6000 yday means we could revisit Feb lows 5500 via a 400pt bearish flag pattern pic.twitter.com/HhuYhxyEh4
8.12am BST
European stock markets have opened in the red, hit by the familiar cocktail of economic worries and Brexit angst.
In London, the FTSE 100 has dropped by 50 points, or 0.85%, to 5916. That erases yesterday's recovery, and is the lowest point since 24 February.
8.03am BST
The Tokyo stock market has tumbled by 3% today, after the Bank of Japan left its stimulus programme on hold ahead of the Brexit referendum.
Live scenes from the BOJ as USDJPY cracks 104.00 for the first time since August 2014 pic.twitter.com/I9xPEQGCnq
No action from #BoJ. Yen soars, #Nikkei closes down 3%. Will their hand be forced if #Brexit fears drives up the value of the yen further?
7.51am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It's Bank of England day. At noon, the Monetary Policy Committee will release its latest decision on interest rates, and say whether is is taking any fresh steps to stimulate the economy.
Related: Federal Reserve puts interest rates rise on hold and blames Brexit
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