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BoE left interest rates at record low

Thursday, May 12 2016
The Bank of England cut its growth forecasts and issued its strongest warning yet that a vote to leave the European Union would hurt the economy. With just six weeks to go until Britain’s referendum, the nine-member Monetary Policy Committee, led by Governor Mark Carney, said there were more signs it was weighing on growth and clouding the outlook. Officials unanimously agreed to maintain their benchmark rate at a record-low 0.5 percent, saying inflation remains subdued.
A vote to leave the EU “could lead to a materially lower path for growth and a notably higher path for inflation,” the central bank said in its quarterly Inflation Report. “Sterling is also likely to depreciate further, perhaps sharply.” The BOE provided a detailed assessment of the risks surrounding a Brexit, saying it could lead to a prolonged period of uncertainty, hurt capital inflows, raise risk premia, increase bank funding costs and threaten financial stability. Carney has maintained he is neutral in the debate and that it would be “political” of him to suppress the central bank’s analysis of the risks.
 
Sterling is currently being traded few points above 1.4460 level. Pair is likely to find support around 1.44 handle and resistance above 1.45 level. Later today, in the US session, Unemployment Claims figures will be released.
More in this category: « Eurozone Industrial Production declined by 0.8% Unemployment Claims increased more than expected »

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