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Carney leaves rates unchanged but confirms scope for further cuts

Published by Forex News Shop Staff Forex News Shop Staff at September 15, 2016

The Bank of England had the luxury of following Wednesdays positive jobs data release which made for much easier reading than some had predicted. Indeed, it would appear that we have survived a post Brexit employment meltdown, at least for now.

The data showed that UK unemployment fell to 4.9% from 5% and demonstrated that currently 31.8 million are employed in the UK.

Bank of England policy makers voted unanimously for UK interest rates to remain at 0.25% which was conclusive if not surprising. The committee chaired by Mark Carney concluded that recent UK data had indeed been stronger than anticipated following the UK’s vote to leave the European union. They did however stress that no conclusions could be made. Confirming the Bank of England still had scope to cut rates further if needed to stabilise the economy following the EU leave vote.

Members also voted conclusively to continue the stimulus package and acquire corporate bonds and gilts. The Bank of England stated that so far has been seen as encouraging and well received by markets; Bond spreads have reduced, mortgage rates are lower and asset prices have risen.

The committee also stated that the UK economy was likely to see little growth but anticipates it to be stronger than initially expected following the EU referendum vote. The report also read that the committee expected Housing investment and business to decline in the latter part of 2016.

The report looked relatively favourably on the housing market describing the climate as better than expected.

Inflation levels remained at 0.6% lower than projected in the August report and therefore well below the 2% targeted by the Bank of England. The 2% target level for inflation is expected to be achieved in early 2017.

In all the Post Brexit economic conditions had fared better than initial expectations and if remain data was to remain consistent it is well expected that rates could be cut further.

Following the rate and policy decision and announcements, the GBP initially fell from 1.3236 to 1.3185 against the USD before recovering and closing the UK session at 1.3239. GBP/EUR reacted in a similar way trading at a high of 1.1783 a low of 1.1720 and closing around 1.1775.

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Forex News Shop Staff
Forex News Shop Staff
We cover foreign exchange, currency and cryptocurrency news and guides. Our readers can find currency-specific foreign exchange news, political updates affecting currency and insight into where foreign exchange trends may go, as well as the latest cryptocurrency analyses and trends.

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