Bank of England MPC member Silvana Tenreyro said two more interest-rate increases will probably be needed to get inflation back to target, but Brexit will be the real determinant of where policy goes next. Her comments reinforce the view of other Monetary Policy Committee members that the path over the next three years isn’t set in stone. While inflation is above the BOE’s 2 percent goal, how the exit from the European Union filters through the economy and hits migration, investment and trade remains unknown . Tenreyro said that economic growth will be “modest” over the BOE’s forecast horizon. With weak productivity undermining the economy’s potential, even that will be enough to fuel domestic inflation pressures.
The housing market has cooled sharply this year and the UK Finance trade association said on Friday banks approved 40,488 mortgages for house purchase last month, down from 41,576 in September and 3 percent less than in October 2016. The report also showed “Businesses continue to exercise a cautious approach to borrowing with survey indicators showing demand for credit from smaller and medium-sized businesses falling in the third quarter.” A separate survey from polling company YouGov and economics consultancy Cebr showed consumer sentiment had fallen to its lowest level since just after the Brexit vote.