Markets

'Carney is always WRONG!' Brexiteer RIDICULES BoE boss after gloomy economic forecasts

'Carney is always WRONG!' Brexiteer RIDICULES BoE boss after gloomy economic forecasts

Brexit is causing the United Kingdom economy to weaken, it said, cutting its 2019 growth forecast to just 1.2%, the lowest since the financial crisis.

The Bank of England said Britain faced its weakest economic growth in 10 years in 2019, blaming mounting Brexit uncertainty and the global slowdown, but it stuck to its message that interest rates will rise if a Brexit deal is done.

Barry McAndrew, ‎fixed income senior portfolio manager at State Street Global Advisors, EMEA, said: "The committee seem happy to wait for some clarity on Brexit negotiations and the economies response to it, before making their next move".

"Nothing has really changed in terms of the UK's economic prospects since the MPC's last decision to keep rates the same in December - the direction of the economy is still dogged by the potential of a no-deal Brexit".

Alongside the dire warnings about United Kingdom growth, the central bank's nine-member Monetary Policy Committee (MPC) voted unanimously to leave rates at 0.75%.

It might end up as a no-deal Brexit which would be awful for the United Kingdom economy, or it might be postponed and that would push uncertainty further down the road. Modi's government has been pushing the RBI to transfer more of its excess capital to the state as well as ease lending restrictions on banks to spur growth.

The pound initially tumbled after the report, but later recovered to stand 0.4% higher at 1.298 USA dollars and 0.4% up at 1.14 euros.

The quarter-point reduction in the benchmark repo rate follows intense pressure late previous year on the RBI to listen to government and business concerns and ease monetary policy.




Some economists also felt that there was a danger that a largely independent central bank could come under government pressure - providing too much stimulus for the economy after last week's budget handouts.

But it said the growth hit was expected to be short-lived, with a recovery in expansion later in 2019 - though this is based on a Brexit deal being reached by March 29.

Rain Newton-Smith, the chief economist at the CBI, the business lobby group, said: "It's now crunch time - a no-deal scenario must be taken off the table because the economy is seizing up from uncertainty".

The FXStreet Forecast Poll 1-month forecast turned neutral expecting probability of delayed Brexit may change the outlook going forward.

It forecasts inflation - now at 2.1% - will fall below its 2% target for much of 2019, before picking up again due to domestic pressures, such as wage growth.

In its minutes, the Bank continued to stress that interest rate rises were likely to be needed "at a gradual and to a limited extent" to bring inflation back to target by 2022.

The surprise move came nearly a week after Modi's administration unveiled an expansionary budget, which included US$13 billion of help for consumers ahead of the poll that's due by May, and days after a top adviser to the prime minister said the RBI should cut rates.