Bank of England interest rate decision grips the City – business live

Aug 3, 2017 | Bad Credit Loans, Bank Lending, Business Lending, Business Loans, Capital, Economics, Finance, Non-Bank Loans, Working Capital

The agenda: It’s Bank of England Day

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The Bank of England is firmly in the spotlight today as Britain’s central bank prepares to set interest rates, and publish its latest inflation report.

Investors and traders in the City are nervous watching, as the BoE is likely to move the markets – especially if we get a shock decision.

The Bank is expected to:

  • Leave interest rates at their current record low of 0.25%
  • Update, and probably cut, its growth forecasts following recent weak GDP figures.
  • Give a new assessment on the health of the UK economy

But behind the scenes, the Bank’s monetary policy committee is riven by tensions and arguments over whether borrowing costs are simply too low. And with inflation over target, at 2.6%, today’s decisions probably won’t be unanimous.

City economists expect at least two hawkish policymakers to vote to raise borrowing costs today. Ian McCafferty and Michael Saunders could even be joined by the Bank’s chief economist, Andy Haldane.

Japanese bank Nomura has boldly stuck its neck out and predicted that the Bank will actually raise interest rates today. That would be something of a shock, frankly, and would probably send the pound soaring.

Either way, governor Mark Carney has the pleasure of a grilling from the nation’s economics journalists after the announcement is made. He can expect questions over Britain’s consumer credit boom, the impact of Brexit on the economy, and whether the public will continue to suffer falling real wages.

Hopefully everything will go smoothly; some Bank staff are holding the last day of their three-day walkout over a below-inflation pay deal.

On Tursday, members of the Unite union wore masks depicting Mark Carney at the start of a three-day strike over low pay.

 On Tursday, members of the Unite union wore masks depicting Mark Carney at the start of a three-day strike over low pay. Photograph: Wiktor Szymanowicz / Barcroft Im/Wiktor Szymanowicz / Barcroft

Before that, we get a new healthcheck on Britain’s service sector. The Services PMI is expected to show a small pick-up in growth, rising from 53.4 to 53.6. But after yesterday’s surprisingly weak construction data, another surprise can’t be ruled out….

The agenda:

  • 9am BST: Eurozone service sector PMI for July
  • 9.30am BST: UK service sector PMI for July
  • 10am BST: Eurozone retail sales for June
  • Noon BST: Bank of England interest rate decision

Updated






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