Carney Warns of Rate Hikes if “Smooth” Brexit Achieved


Mark Carney said yesterday the Bank Of England would be keen to raise interest rates more than investors are predicting if the U.K. leaves the EU ‘smoothy’. Interest rates remained unchanged at 0.75% on Thursday and Carney expects no change to interest rates until the current uncertainty surrounding Brexit resolves. Carney went on to say if there is a resolution, or some sort of arrangement leading to a smooth transition for the U.K. to depart from the EU then an increase in interest rates will be more frequent.

The BOE’s growth forecasts were upbeat predicting unemployment to fall further and predicting the economy will generate more excess demand than previously expected, whilst at the same time cutting the near term inflation outlook. The pound was choppy after the decision, initial gains were soon reversed. The forecast for GDP expansion this year was lifted to 1.5% from an earlier prediction of 1.2% because of a stronger first quarter performance as companies stockpiled for Brexit. Officials now see the economy expanding by 0.5% in the first three months of the year, up from 0.3% in March.

Key Announcements

13:30 – USD: Average hourly earnings (mom) expected to be higher at 0.3% from 0.1%
13:30 – USD: Non-farm employment change – forecast tp be 181k from previous 196k
13:30 – USD: Unemployment rate – unchanged at 3.8%