Bank of England slashes growth forecasts and issues Brexit warning - as it happened
Governor Mark Carney tells press conference that there would be a 'material impact' on growth if Britain votes to leave the EU
- Lamont blasts Mark Carney
- Summary: Carney warns Brexit vote could cause recession
- Carney: Everyone's worried about referendum vote
4.45pm BST
That's all for tonight. Here's our latest news story on the Bank of England's Brexit intervention:
Related: Brexit could lead to recession, says Bank of England
4.44pm BST
Mark Carney dire warnings over Brexit didn't help the mood in the stock markets today.
The FTSE 100 has just closed for the night, down 58 points or almost 1% at 6104. That's the lowest level in 5 weeks.
The weakness in London has been broad-based, which should raise warning signs that this is not just a mining-related selloff. Instead, it seems investors are heading for the exits once again, threatening a further unwind of the gains made since mid-February.
The battle for the title 'world biggest company' is about to begin. pic.twitter.com/dnDqgtmxOM
4.25pm BST
Dean Turner, Economist at UBS Wealth Management, predicts that UK interest rates could be raised before Christmas -- if the Remain campaign wins next month.
"With inflation marginally above the Bank's target two-years forward, our long-held belief that market expectations on interest rate hikes are far too pessimistic has been confirmed. Assuming the economy recovers in the second half, we expect to see a UK interest rate rise near the end of 2016 or soon after."
3.54pm BST
Back to the Bank of England, and Joe Rundle, head of trading at ETX Capital, has a good take on Mark Carney's Brexit dilemma:
The central problem facing the Bank in the event of a Brexit is to balance rising inflation from a weak pound with the downward pressures from a slump in demand.
The assumption is that rates will have to rise in the event of a Brexit to stem a run on the pound, but Carney's suggesting something rather different. His point is sensible - we may not get the runaway inflation that many are expecting if the shock of Brexit means households stop spending. Moreover, a vote to leave would hit the euro hard, which would offset a decent amount of pound weakness.
3.50pm BST
Here's JP Morgan's Stephanie Flanders:
Shocked and saddened to hear of death of economist Danny Gabay of Fathom. A brilliant economist with great warmth. I will miss him.
3.34pm BST
This is from the BBC's business journalist Adam Parsons:
The economist Danny Gabay has died. Clever, combative - he would have loved debating #Carney.
3.08pm BST
We have some sad news to report. Danny Gabay, the respected City economist who founded Fathom Consulting, has passed away at the age of 47.
"His passing is a great loss not only to his family, friends and colleagues, but also to the wider economics community. Fathom Consulting is committed to continuing Danny's great work and to commemorate his passing will be making a donation to the Marie Curie Hospice in Hampstead where he spent his last few days."
"Danny was a sharp, astutely intelligent, loving and caring individual with an outrageous sense of humour. He was also a huge inspiration to many. However, his greatest achievement in life, in fact, his pride and absolute joy, were his two beautiful children that he has left behind: Raphael and Isabella. My pledge to my brother was to always be there for his children and to never, ever let them forget what a wonderful father, husband, son, brother, uncle, nephew, cousin and friend he was to all who met him."
Saddened by the passing of Danny Gabay, a provocative and innovative economist. Thoughts with all @fathomcomment
2.50pm BST
City grandee Lord Paul Myners, who was a government minister during the 2008 financial crisis, has welcomed Mark Carney's comments:
"The Governor of the Bank of England could not be clearer: leaving the EU would lead to lower growth and a plummeting pound. It is a risk we cannot afford to take.
"The evidence is now overwhelming that staying in Europe will mean more jobs, lower prices and more financial security for British families."
2.38pm BST
Lord Lamont, who was chancellor of the UK from 1990 to 1993, has blasted Mark Carney for his Brexit comments.
The Governor should be careful that he doesn't cause a crisis. If his unwise words become self-fulfilling, the responsibility will be the Governor's and the Governor's alone. A prudent Governor would simply have said that "we are prepared for all eventualities".
'There are huge opportunities for the UK outside the EU. We are a strong economy and can stand on our own two feet like all other modern, independent countries.'
Norman Lamont backs Brexit - ex chancellor here on Black Wednesday with aide D Cameron. Big moment for uk politics pic.twitter.com/E5NVM5TnhS
2.12pm BST
The Institute of Directors is urging businesses to listen to Mark Carney.
James Sproule, the IoD's chief economist, says:
"The Bank of England has highlighted its concerns over the impact the referendum is having on business, and the even greater impact that it could still have on the economy. No matter what they eventually decide, every business in Britain should be giving very serious consideration to the concerns the Bank articulates."
2.01pm BST
The editor of the FT, Lionel Barber, tweets that the BoE governor has given up being impartial:
Mark Carney off the fence and into battle against Brexit https://t.co/ZLzvZBuHkq
2.00pm BST
Rain Newton-Smith, CBI Economics Director, has welcomed Mark Carney's comments:
"The evidence that a vote to leave the EU would make a serious dent in our economy, jobs and prosperity is overwhelming and still growing.
"The continued lack of a realistic argument on how the UK economy would be better off outside the EU is revealing.
1.54pm BST
Iain Duncan Smith, the pro-Brexit former Work and Pensions secretary, has dismissed the Bank of England's concerns:
IDS for the Outers says Bank of England anyone who can guess what'll happen with economy 'either soothsayers or have links with God'
1.50pm BST
We had expected some comments on Brexit today, but the Bank of England has gone rather further than expected.
"Of course there's a range of possible scenarios around those directions, which could possibly include a technical recession."
This issue is the number one issue that is raised with me and my colleagues every time we meet another central banker, a finance minister, the head of a major corporation, and most small business owners.
It is a judgement not based on a whim... It is the judgement of the independent MPC and it is the judgement of all members of the MPC.
There are limits, however, to what monetary policy can deliver... monetary policy cannot immediately offset all the effects of a shock."
1.38pm BST
Final question.
Q: Vote Leave's official position is that Britain would leave the single market; is that a worry?
1.29pm BST
Carney also admits that the Bank can't be sure how the underlying economy is performing, because of the uncertainty created by the Brexit vote.
1.26pm BST
Q: Should the Bank of England really be changing its schedule to only hold eight meetings a year, not 12, given the threats to the economy?
Carney says it's not a problem. We could meet anytime, if needed, he says, indeed the MPC could hold a meeting right now!
1.23pm BST
Q: Will the Bank be announcing further measures to protect the economy around the referendum vote?
Never say never, Carney replies. But we learned with Scotland that it's best to release liquidity facilities well in advance, so people don't think we're signalling potential threats.
1.17pm BST
Q: How long would it take for the uncertainty over the EU referendum to fade?
Deputy governor Ben Broadbent says that the Bank has done some work on this.
1.14pm BST
Carney pledges there will be no shortage of liquidity for banks if Britain votes to leave the EU.
1.13pm BST
Q: Isn't this more Project Fear? Why has the Bank not considered the benefits from Brexit, such as a cheaper pound helping exports and less regulation?
Carney reiterates that the Bank is just following its mandate by explaining its concerns about the EU referendum.
1.08pm BST
Q: Are you saying that the Bank would be powerless to stop Britain falling into recession?
Monetary policy has a lag, so if there is a sharp drop in activity from any event it takes time for stimulus to feed through and cushion that demand, Carney replies.
1.06pm BST
Q: Did the MPC discuss the impact that a Leave vote would have on the international markets and the global economy?
There is a risk of a spillover to the international markets from the uncertainty around the EU referendum, Carney responds.
This issue is the number 1 issue that is raised with me and my colleagues every time we meet another central banker, finance ministers, the head of a major corporation, and most small business owners.
1.03pm BST
Carney is very clear. #Brexit risks recession. Fully within BoE remit to say this pic.twitter.com/VBm450BOKx
1.02pm BST
Q: What tools could the Bank use to stimulate the economy if it suffered a 'sudden stop'?
Our judgement is that we can lower interest rates further, before turning to unconventional measures, says Mark Carney.
12.59pm BST
Q: Is George Osborne right to say that the Bank is warning that Brexit would be a 'lose-lose' for Britain?
Carney declines to comment on the chancellor's tweet (see earlier), saying Osborne answers for himself.
12.55pm BST
Q: Can you give more detail about how the pound would fall after a Brexit vote, and would it bounce back?
Deputy governor Ben Broadbent says the Bank hasn't made any numerical forecasts about Brexit, including for the exchange rate.
12.52pm BST
Q: Your comments on Brexit go much further than during the Scottish independence compaign - why, and why today?
Carney defends his comments - the EU referendum is the biggest domestic risk to the UK, so the MPC has a duty to talk about how it would respond.
Governor Carney: "It's explicitly in statute and our remit to talk about risks and trade offs"
12.49pm BST
A technical recession means two quarters of negative growth, so Carney appears to be suggesting that the UK could contract through the second half of this year if the Leave campaign wins June's referendum.
12.46pm BST
Onto questions, and the BBC's Kamal Ahmed grabs the 'elephant in the room' by the ears:
Q: Can you rule out Britain falling into recession if we vote to leave EU?
12.40pm BST
Carney concludes his statement by saying that the people of Britain will make a significant decision on June 23, and they will consider a much wider range of issues than just monetary policy.
Whatever the public decides, the MPC will address the consequences for growth and inflation.
Carney at inflation report press conference : mpc would face a "challenging trade off" in event of Brexit pic.twitter.com/boyhj8bHwc
12.37pm BST
The EU referendum is the 'elephant in the room', says Mark Carney.
He warns that it is making it hard for the Bank to read the current economic data .
Carney: "now turning to the elephant in the room" repeats minutes on the one hand on the other hand Brexit views
Carney describes the referendum as "the elephant in the room" - "vote to leave could have material effects..."
12.35pm BST
Mark Carney begins the press conference with some history - reminding us that the UK recovery began three years ago, making Britain the fastest growing G7 country.
But growth has slowed at the start of this year, and appears to be decelerating further
12.32pm BST
12.29pm BST
The Bank of England is giving a press conference on the inflation report right now.
It's being streamed online here.
12.29pm BST
Here's Katie Allen's news story on the Bank of England's warning:
Related: Brexit is biggest risk to UK economy, warns Bank of England
12.26pm BST
This chart, from the inflation report, shows how the pound has slumped by 9% in the last six months - partly due to the EU vote.
12.18pm BST
This looks like the Bank of England's most significant intervention yet in the EU referendum debate.
As well as warning about the impact on unemployment and growth, the BoE has also admitted that it will face a tricky balancing act whether to cut or raise interest rates in the event of Brexit.
"A vote to leave the European Union could materially affect the outlook for output and inflation. In the face of greater uncertainty about the UK's trading relationships, sterling was likely to depreciate further, perhaps sharply.
"In addition, households could defer consumption and firms could delay investment decisions, lowering labour demand and increasing unemployment."
12.16pm BST
The prime minister is also tweeting:
The Bank of England is right to warn leaving the EU could cause lower growth and unemployment to rise - that would hurt working people.
12.12pm BST
Chancellor George Osborne has swiftly responded to the Bank's concerns about Brexit, arguing it bolsters the Remain campaign.
Big moment in EU debate: Bank of England warns vote to Leave would mean both materially lower growth and higher inflation. It's a lose-lose
12.07pm BST
The Bank of England has reiterated its worries about Britain leaving the European Union.
In the minutes of this month's meeting, it says that the risk of Brexit is already hurting the economy:
There are increasing signs that uncertainty associated with the EU referendum has begun to weigh on activity.
A vote to leave the EU could materially alter the outlook for output and inflation, and therefore the appropriate setting of monetary policy. Households could defer consumption and firms delay investment, lowering labour demand and causing unemployment to rise.
Bank of England warns of "materially lower growth" if there is a Brexit vote
12.02pm BST
As feared, the Bank of England has also cut its growth forecasts.
It now expects the UK to grow by 2.0% this year. That is a downgrade compared to February's forecasts, when it expected growth of 2.2%.
12.00pm BST
Here we go! The Bank of England has voted 9-0 to leave interest rates at their current record low of 0.5%.
11.56am BST
#BOE. Brace!
11.51am BST
Just 10 minutes to go until the Bank of England announces its interest rate decision, and publishes the quarterly inflation report.
Economist Mark Astley, who used to work at the BoE, reckons dovish MPC members are unlikely to actually vote to cut rates.
#BOE rate cut votes unlikely as could add to uncertainty & minutes stressed cautious (worsening) data interpreation https://t.co/gMY0QvqtXb
11.20am BST
Mark Carney won't be able to avoid talking about the EU referendum at his 12.30pm press conference, predicts Peter Rosenstreich, head of market strategy at Swissquote Bank.
Concerning the press conference, questions will be geared towards the BoE view on "Brexit". Carney will be undoubtedly prepared for this and will tread cautiously over every neutral, unbiased response.
This minefield should generate pound volatility but nothing lasting, barring Carney going rogue. The focus of the inflation report will be the extent of the BoE adjustment of forecasts and contingency plans after the "Brexit" vote. We expect that any mention of the event will be limited due to the Bank's effort to appear neutral. Yet, it will be difficult for BoE's Carney to stay balanced as his prior views suggest that "Brexit" poses a massive economic risk to the UK.
10.54am BST
They call it Super Thursday -> 1hour 10minutes until we see the Bank of England try and forecast the unforecastable.
10.35am BST
City AM have written a handy Super Thursday checklist, here.
Basically, we should watch out for:
Five things to look out for from Bank of England's Super Thursday https://t.co/MGhPDRIXuF pic.twitter.com/re6xMhnxWZ
10.20am BST
Mark Carney will probably also be quizzed about the UK housing market today.
Related: Average price of London home almost doubles to 600,625 since 2009
9.38am BST
Every City economist polled in the run-up to today's meeting expects the Bank of England to leave interest rates on hold.
Borrowing costs have been pegged at 0.5% since March 2009, so the 'rate hike' button is looking pretty dusty:
It's BOE day, so time to look at my *exclusive* live footage of the Old Lady's 'change rates' dashboard: pic.twitter.com/3xdMTKYe1j
9.06am BST
European stock markets have fallen in early trading as economic growth fears swirl through the City.
The FTSE 100 has dropped by 46 points, or 0.75%, to 6115 points, and there are heavier losses in Paris and Frankfurt.
Whilst rates will inevitably remain unchanged the focus will be on whether any of the 9 Monetary Policy Committee members vote for a cut this afternoon, with Andy Haldane and Gertjan Vlieghe the likeliest candidates for a walk on the dovish side.
Beyond the headline rate vote the central bank will reveal its revised forecasts for the UK's growth, and things don't look pretty.
8.45am BST
The Brexit question will dominate the agenda at the Bank of England today, predict Bloomberg.
The pre-vote nerves are manifesting themselves in the pound.
A gauge of hedging for sterling losses versus the dollar climbed to the highest since 2003. While sterling has recovered from the seven-year low against greenback that it reached in February, it's still the worst-performing Group-of-10 currency in 2016.
8.38am BST
Governor Mark Carney will endure a tricky press conference today, predicts Sam Hill of RBC Capital Markets.
And that's because the looming Brexit vote will have a massive impact on interest rates.
Essentially, neither Governor Carney, nor the MPC collectively, are likely to want to be drawn into issuing a significantly new or decisive message about the future path of monetary policy at this stage, if they believe the optimal path for rates (and asset purchases) is dependent on which way the vote goes
8.12am BST
City economists are adamant that the Bank of England will leave interest rates unchanged today:
I'm not sure what is more likely; @Nigel_Farage voting to Remain part of the EU or the @bankofengland voting to move rates today.
It is not impossible that someone will vote for a Bank Rate cut at the Bank of England today #BoE #GBP https://t.co/eMrVHCOgG7
7.53am BST
Good morning.
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