Bank of England leaves interest rates on hold as UK braces for no-deal Brexit - as it happened
Bank's Monetary Policy Committee maintains borrowing costs, and warns that further cliff-edge Brexit deadlines could hurt economy
Earlier:
2.59pm GMT
Time for a quick recap:
The Bank of England has left UK interest rates on hold, as it tries to protect the UK economy from Brexit pains.
"Despite the furore surrounding Brexit, this may well be as a result of unexpected UK earnings growth, so it is important to maintain perspective about what this means for the industry in the long term."
Brazil's stocks fall more than 1%, the real extends losses, bond yields and implied interest rates rise on news that former Brazilian president Michel Temer has been arrested as part of the "carwash" money laundering and corruption investigation. pic.twitter.com/dwhdu0BJVL
#BRAZIL' s Former Prsdt Michel #Temer was arrested this morning. He is concerned by two affairs linked to #LavaJato #corruption #justice @Valeurs piece published in 2017 ! https://t.co/d2ksmJuUT8 https://t.co/jytSvlwGc7
2.12pm GMT
Tom Stevenson, investment director for Personal Investing at Fidelity International, predicts that UK interest rates will remain on hold until 2020, having been left at 0.75% today.
There is certainly no economic imperative for the Bank to change its cautious stance. With inflation below its 2% target, the pressure is off. The only way that interest rates would rise this year would be if MPs agreed a deal and there were a material relief pick-up in the economy. Even then, a rising pound would likely bear down on inflation so 'lower for even longer' it almost certainly is.
"Over the decade, a UK bank account will have given savers a 5% return, during which time the cost of living has increased by 34%. These savers will be hoping that the Bank can find reverse gear sometime soon, but today's announcement will provide them with little hope."
"Facing a Schridinger's Brexit in just over a week, the Bank of England continues to have its hands tied on interest rates.
"It's virtually impossible for the Bank to make clear decisions right now while the various unknowns surrounding the future path for the economy linger. The desire to gradually normalise interest rates from their low levels is already complicated by improved wage growth on one side and weakening economic growth on the other, notwithstanding calculations over the Brexit process. All eyes will now be on any potential further communications from the Bank on how it might support liquidity and confidence in the event of a possible no deal.
At the moment the Bank is looking at a Catch-22 type situation. If the UK were to endure a fractious exit from the EU that could lead to a further drop in the Pound, which puts upward pressure on inflation through higher import costs. In the short term at least that will lead to rising prices and the natural response to that would be for the Central Bank to raise rates to avoid fuelling further increases.
At the same time, however, it would come under pressure to inject stimulus into the economy with a loose policy stance to help balance out any immediate term financial impacts of trade disruption."
1.38pm GMT
JP Morgan has revised its Brexit forecasts...and downgraded the chances that Britain leaves the EU with Theresa May's deal.
The bank now thinks a general election is most likely (at 30%, up from 15%), with a higher chance of the UK crashing out without a deal (15%, up from 10%).
JPMorgan updates its Brexit probabilities.
In a nutshell: every outcome is unlikely - but the least unlikely is a general election pic.twitter.com/YDh86TYYTD
I have fixed it for them. pic.twitter.com/4UQVC5OuvT
12.59pm GMT
Newsflash: The UK's top union official and the head of its biggest employers group have issued a joint plea to Theresa May to change Brexit policy before the UK suffers major damage.
TUC General Secretary Frances O'Grady and CBI Director-General Carolyn Fairbairn have sent the PM a joint letter calling for a new approach.
Together we represent millions of workers and tens of thousands of businesses. It is on their behalf that we are writing to you to ask you to change your Brexit approach.
Our country is facing a national emergency. Decisions of recent days have caused the risk of no deal to soar. Firms and communities across the UK are not ready for this outcome. The shock to our economy would be felt by generations to come.
12.48pm GMT
Some good news -- the Bank's forecasters predict that the UK economy will grow by 0.3% in the current quarter.
That's up from a previous forecast of 0.2%, and would also be an acceleration on the 0.2% growth recorded in October-December 2018.
12.35pm GMT
It's hard for the Bank of England to make many firm forecasts until we have more clarity on Brexit.
But as things stand, the MPC still expects to raise interest rates "at a gradual pace, and to a limited extent" over the next couple of years.
12.17pm GMT
Here's our news story on the Bank's decision:
Related: Bank of England holds interest rates at 0.75% amid Brexit chaos
12.16pm GMT
Brexit clearly cast a dark shadow over this month's Bank of England monetary policy meeting.
The committee discussed the likely impact of Brexit uncertainties on the economy in the future -- and are worried that a series of 'cliff-edge' deadlines could hurt the UK.
If, for example, businesses judged that uncertainty was likely to fade quickly, then that might lead to a larger immediate reduction in capital expenditure, as they waited for a resolution to emerge.
In contrast, a more protracted period of uncertainty might lead to a less abrupt reduction in expenditure if companies judged it too costly to wait for any resolution to become apparent. There was also the possibility of further cliff-edge uncertainties that could have a significant effect on spending as any new deadline approached.
12.09pm GMT
Brexit uncertainties had also hurt confidence and business investment, the Bank of England warns.
Its Monetary Policy Committee have also heard that firms have been stockpiling ahead of Brexit.
There had also been further evidence from a range of sources that companies had been building up their inventories recently, although the latest strength in imports was consistent with that not having a large impact on GDP growth.
12.04pm GMT
The Bank of England also reports that four-fifths of UK firms have done all they can to prepare for a no-deal Brexit.
The minutes of this week's meeting say:
More broadly, the results from the latest special survey of companies' preparations for EU withdrawal, conducted by the Bank's Agents, had suggested that around 80% of companies judged themselves ready for a no-deal, no-transition Brexit scenario. This compared with a figure of around 50% in the equivalent January survey.
Nevertheless, many of those companies had also reported that there were limits to the degree of readiness that was feasible in the face of the range of possible outcomes in that scenario. These included issues relating to tariffs, border frictions, exchange rate movements and recognition of certifications, which many companies had noted were outside their control. In the Agents' survey, companies had continued to report significantly weaker expectations of output, employment and investment in the event of a no-deal, notransition Brexit.
12.00pm GMT
Newsflash: The Bank of England has left UK interest rates on hold at 0.75%.
It's a unanimous vote too, with all nine members of the MPC choosing not to change borrowing costs this month.
11.54am GMT
It's nearly time for the Bank of England's interest rate decision (surely a no-change?).
Traders will be looking for more clarity about how monetary policy may develop in future months. Jeremy Thomson-Cook of World First says there's not much certainty now:
Summary of UK interest rate probabilities at the moment; market currently pricing in a 28% chance of a hike by the end of the year but also a 10% chance of a cut.
Nobody has a scooby doo
11.42am GMT
One of Britain's biggest steel stockholding businesses is on the brink of administration, Sky News reports.
Meridian Metal Trading, which employs about 170 people, could appoint administrators on Friday, unless emergency talks with prospective buyers deliver a breakthrough.
Exclusive: Meridian Metal Trading, one of the UK's biggest steel stockholding groups, is on the brink of collapse days after MPs accused the Government of failing to deliver a sector deal for British steel companies. https://t.co/tYT7aavXRD
11.34am GMT
The pound's wobble seems to be triggered by European Parliament Brexit coordinator Guy Verhofstadt.
Verhofstadt has told reporters that the UK shouldn't be allowed to extend Brexit beyond the parliamentary elections scheduled for May 23-26.
EU's Verhofstadt says it's impossible to extend Brexit beyond May 23 https://t.co/CzCfnbdlOm via @LyubovEmWorld #tictocnews pic.twitter.com/HDHiJOz1rV
11.13am GMT
The chancellor has taken a break from the Brexit crisis to tweet about today's borrowing figures:
Today's @ONS figures show how far we've come in repairing the public finances. Compared to this point in previous years, borrowing is the lowest for 17 years. We're taking a balanced approach, investing in public services and keeping taxes low, while getting debt falling. pic.twitter.com/Gf3g8lt1Ll
10.55am GMT
The pound has just hit a one-week low against the US dollar, as political worries overshadow this morning's decent economic data.
Sterling has dropped to $1.313, its lowest level since MPs voted to seek an extension to Brexit last week.
"In a thinly veiled ultimatum to MPs, Theresa May has put the emphasis back on Parliament to support her deal by confirming that she won't extend Brexit beyond June 30th. While the chances of it passing may be marginally improved, the odds are still stacked against her.
"Should Parliament reject the deal again then the path ahead remains unclear, with Donald Tusk keeping tight-lipped on what the options would be in such a scenario. Our sense is that Parliament will intervene to prevent a no deal exit, but as the clock ticks down, the risk of an accident will only increase.
Related: Brexit: May's appeal to nation backfires as MPs accuse her of stoking hate - Politics live
10.32am GMT
John Hawksworth, chief economist at PwC, warns that a hard Brexit could undermine the progress in cutting Britain's deficit.
All bets would be off in the case of a disorderly 'no deal' Brexit, which could push UK growth into negative territory, dampening tax revenue growth and widening the budget deficit significantly over the next few years."
10.30am GMT
This chart shows how UK public borrowing this year is comfortably below last year's:
10.28am GMT
Two pieces of strong economic news today: punchy growth in retail sales in Feb and another fall in the deficit thanks partly high income tax revenues. Turns out the UK economy isn't doing all that badly at the moment...
10.20am GMT
In another pre-Brexit boost, Britain's public finances are stronger than expected.
The UK borrowed 0.2bn in February to balance the books, 1.0bn less than in February 2018.
1. Public sector borrowing fell by 18bn in the financial year to February, from 41bn in 2017/18 to 23.1bn in 2018/19. A 31.9bn increase in receipts vs a 12.9bn increase in current spending were the main drivers. pic.twitter.com/6xt4fHxg2n
2. It's worth looking at what the major contributors to the overall 5% increase in receipts have been. Top of the list are: VAT, PAYE income tax, NICs & corporaiton tax. Biggest drags from SDlt & receipts from the Asset Purchase Faciliaty pic.twitter.com/EIE6A2wF3O
10.07am GMT
Howard Archer of EY Item Club also suspects some shoppers have been preparing for a hard Brexit.
Retail sales in February reportedly got help from the warm weather lifting sales a garden centres and for sales of sporting equipment.
There was a drop in food sales while sales of clothing fell back after getting a significant lift in January from the sales. There could also be the possibility that retail sales could have gained a modest lift in February from some stockpiling of goods by consumers wary of a disruptive Brexit at the end of March. There has been some limited reports of this occurring. It is also possible that some consumers brought forward purchases amid concern prices could rise if a disruptive Brexit at the end of March sees sterling weaken sharply
10.05am GMT
As this chart shows, UK retail sales have been consistently solid since Britain triggered Article 50 almost two years ago.
9.47am GMT
Duncan Brewer of consultancy Oliver Wyman suspects that anxious shoppers have been stocking up in case of a disorderly Brexit - boosting sales in February.
"The increase in February sales is likely to be down to one of two things. Firstly, the uncertainty around Brexit - consumers are stockpiling for fear of price increases further down the line.
Secondly the unseasonably warm February has encouraged consumers to prepare for the Spring and Summer months ahead, purchasing things like barbecues, garden tools and summer clothing.
9.39am GMT
The ONS's head of retail sales Rhian Murphy explains:
"Retail sales continued to bounce back in the three months to February with strong increases in fuel sales and online shopping.
"Food growth slowed, however, due to a significant fall for supermarkets, specialist food and alcohol stores in February after the sales and promotions seen in January came to an end."
9.37am GMT
Newsflash: UK retail sales rose unexpectedly last month, in an indication that Brexit hasn't stopped consumers hitting the shops.
Retail sales were 0.4% higher in February than January, the Office for National Statistics says. Economists had expected a 0.4% decline.
UK Retail Sales incl. Auto (Feb) M/M
Actual: 0.4% Survey: -0.4% Prior: 1% #gbp
UK Retail Sales incl. Auto (Feb) Y/Y
Actual: 4% Survey: 3.3% Prior: 4.2% #gbp
9.29am GMT
Marc-Andri(C) Fongern of MAF Global Forex predicts the pound will weaken as the Brexit crisis intensifies:
We expect GBP to struggle ahead of next week's vote as (a) the outcome remains highly uncertain (b) the UK is getting closer to the cliff edge. cc. @ING_Economics #Brexit #GBPUSD #EURGBP #FX pic.twitter.com/tgUA6ieygz
9.26am GMT
European stock markets are a mixed bag this morning.
Britain's FTSE 100 has gained around 30 points, or 0.4%. That's partly due to the weak pound boosting multinationals' earnings.
9.04am GMT
Newsflash: Norway's central bank has raised interest rates.
Norges Bank has hiked its benchmark rate to 1%, from 0.75%, saying that the Norwegian economy is growing faster than it expected.
The upturn in the Norwegian economy appears to be stronger than anticipated earlier. On the other hand, there are prospects for weaker growth and lower interest rates abroad.
Norges Bank's Executive Board has decided to raise the policy rate by 0.25 percentage point to 1.0 percent: https://t.co/DCpKbpeJjJ
8.51am GMT
Brexit worries are pushing the pound down this morning.
Sterling has dropped back to $1.3155 against the US dollar, and a1.155 against the euro (levels we also saw yesterday).
The ERG have not folded and most definitely will not fold, Mark Francois tells @SkyNews of May's deal
With 8 days until Britain is meant to leave the EU, chasing an extension that'll only be granted if Theresa May's twice-rejected withdrawal agreement is passed by parliament, the pound look pretty poorly after the bell.
Morning Market Comment: Sterling shaky in aftermath of Tusk telling-off and May's controversial address... https://t.co/ODdoMSLCvt
8.43am GMT
Newsflash from Zurich: Switzerland's central bank has voted to leave interest rates on hold, at their current record low of -0.75%.
The SNB says that such negative rates are still necessary, given the 'highly valued' nature of the Swiss franc.
8.31am GMT
Retailer Next says it's not suffering from Brexit upheaval.
There is still a great deal of uncertainty around the exact shape and form of the UK's future relationship with the EU. We can see no evidence that this uncertainty is affecting consumer behaviour in our sector.
Our feeling is that there is a level of fatigue around the subject that leaves consumers numb to the daily swings in the political debate. It appears to us that consumer behaviour (in our sector) will only be materially changed if the UK's departure from the EU (or continued uncertainty around this subject) begins to affect employment, prices or earnings. It does not seem to be having any adverse effect on these variables at the present time.
8.26am GMT
Rebecca Harding, CEO of data service Coriolis Technologies, thinks the Bank of England needs to think seriously about how Brexit may undermine their powers.
The UK is isolated in its current position. It is neither able to engage as part of the EU nor able to embark on its independent negotiations with the US. When it does engage, it will be as the US's fifth largest export partner representing just 4.4% of its total imports - a drop in the ocean compared to China's 26%. The value of sterling is 65% correlated with the value of UK's export trade with the US - in other words, there are some advantages to a weaker value of sterling for UK exporters, but not enough to warrant aggressive monetary policy.
The Bank of England's MPC will not raise rates this week, indeed it would be foolhardy to do so when there is so much uncertainty at present. However, policy makers should be thinking about how little influence they may have in the future if UK's trade policy becomes "independent". This should focus minds on what it will take to make the UK truly competitive in the future. It is an opportunity to re-focus its thinking again around labour markets and productivity which affect real incomes in the future.
8.19am GMT
Here's a handy reminder of who's on the Bank of England's MPC, and whether they're more likely to be pushing to raise interest rates or lower them.
8.12am GMT
The Bank of England is trapped in 'limbo' by Theresa May's decision to see a Brexit extension, says Bloomberg's Lucy Meakin.
She also points out that the Bank's policymakers have sounded more concerned about the UK economy recently.
Since their last meeting in February, when Governor Mark Carney warned the "fog of Brexit" is creating tensions, all but two of the nine-member Monetary Policy Committee have given speeches. Most outlined a dovish tilt to their thinking. Data has provided a mixed picture, with the direct impact of Brexit on the figures hard to gauge.
In the near term, growth looks set to slow. The U.K.'s Office for Budget Responsibility cut its forecast for this year to 1.2% from 1.6%. That would be the weakest since the financial crisis and is in line with the BOE's own projection. PricewaterhouseCoopers also slashed its 2019 GDP estimate Thursday to 1.1%.
Here's what to expect at today's Bank of England rate decision https://t.co/5cgHEeRi8N
8.00am GMT
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One of the added curiosities of the PM speech is that since there are more Conservative MPs than any other party, the Conservative PM was openly attacking the Conservative Party. pic.twitter.com/9XQCalwVpr
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