It looks like Mark Carney is stepping down as governor of the Bank of England without a final blast of fireworks.
The Bank’s Monetary Policy Committee (MPC) met this week to make its January decision on interest rates. It was Carney’s last meeting as governor. At noon, he announced the latest verdict: the MPC voted by seven votes to two, to keep the UK’s key interest rate where it is, at 0.75%.That’s quite a big deal market-wise. As Ruth Gregory of Capital Economics points out, just a few weeks ago, financial markets were convinced (or at least had the odds at 70%) that there would be a rate cut.
In the wake of the decision to keep rates on hold, sterling bounced somewhat (when monetary policy is tighter than markets expect, it’s usually good news for that country's currency, all else being equal). That’s not to say that the MPC feels relaxed about the economy, or that it expects growth to improve rapidly. Indeed, the Bank’s forecasts for growth and inflation have deteriorated since last time.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So the possibility of a future rate cut is still live, while any potential for tightening still feels a long way off in the distance. The current decision to hold is very much data-dependent. Solid business survey data for January appears to have stayed the MPC’s hand.
But the Bank is ready to act “should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak." However, for now at least, it appears that Carney is going out with a whimper, rather than a bang.
-
Can you afford to retire in 2025?From interest rates and inflation to tax changes, there are plenty of factors to consider if you plan to retire next year – here is how to prepare.
-
8 of the best properties for sale near ski slopesThe best properties for sale near ski slopes – from a luxury cabin in Geilo, one of Norway’s premier ski resorts, to a large chalet in Valais, Switzerland
-
UK wages grow at a record paceThe latest UK wages data will add pressure on the BoE to push interest rates even higher.
-
Trapped in a time of zombie governmentIt’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
-
America is in deep denial over debtThe downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
-
UK economy avoids stagnation with surprise growthGross domestic product increased by 0.2% in the second quarter and by 0.5% in June
-
Bank of England raises interest rates to 5.25%The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
-
UK wage growth hits a record highStubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
-
UK inflation remains at 8.7% ‒ what it means for your moneyInflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
-
VICE bankruptcy: how did it happen?Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
