Bank of England likely to hold rates but cloud of no-deal Brexit looms
The Bank of England will release its highly anticipated interest rate decision and Quarterly Inflation Report today.
With Boris Johnson ascending to the premiership on 24 July 2019 and fears that the risk of a no-deal Brexit is rising, prior positive prospects for the economy might take a sharp turn. While the Bank of England used its May meeting to foreshadow a planned rate hike in anticipation of a smoother Brexit with an exit plan, the UK’s central bank is now expected to adopt a “wait and see” approach.
Though far less likely, a rate cut could also be in the cards if the BoE deems that currency depreciation continues. Earlier this week, the pound dropped to its lowest level in two years.
Johnson’s adamant Brexit date of October 31st and cabinet full of staunch Brexiteers have indicated to the BoE that it must prepare for a no-deal exit. Under these circumstances, there would be an array of tariffs on exports, among a host of other financial roadblocks.
Johnson has made clear to the 27 member states of the European Union that they must reconsider earlier talks between his predecessor and the Union. Some argue that even if Parliament blocks a no-deal Brexit, a snap general election could result in a Parliament that might side with Johnson on Brexit.
