U.K. stocks are cheap; May has been 'abysmal' on Brexit: Gavin Graham
Any hope Bank of England officials may have had of escaping from Brexit limbo this month has been dashed.
The Monetary Policy Committee’s next interest-rate decision will be announced on Thursday, just a week before the U.K.’s planned March 29 exit date from the European Union. While any kind of delay -- which would still need to be approved by the European Union -- would help avoid the worst-case scenario of a no-deal exit, it’s unlikely to lift the “fog of Brexit” that Governor Mark Carney spoke of last month.
Against that backdrop, all 20 economists surveyed by Bloomberg say the nine-member MPC will vote unanimously to keep interest rates unchanged at 0.75 per cent on March 21. That chimes with the views of markets, who don’t see another move until beyond May 2020.
The MPC’s central view remains that a gradual series of interest-rate hikes will be needed in coming years. However, a number of officials, including the hawkish Michael Saunders, have indicated they’re prepared to wait and see how Brexit turns out before making another move.
That may now take longer than previously anticipated. Parliament voted this week to seek a delay to the U.K.’s exit date, buying Prime Minister Theresa May time to try to get her deal through on the third try. If she manages to win that vote -- which could come before the BOE decision -- then it’s likely that a short delay will be requested. Lose it, and there could be a far more a lengthy postponement.