All the day’s economic and financial news, including the Bank of England’s interest rate vote and a eurogroup meeting on Greece
- Latest: Bank votes 6-3 to leaves rates on hold
- Haldane, McCafferty and Saunders vote to raise rates
Earlier:
- UK deficit fell to £5bn in May, best since 2005
- Economists: Government has more room to boost NHS spending
A new Brexit crisis could derail the Bank of England from raising interest rates in August, despite Haldane’s hawkish conversion.
Silvia Dall’Angelo, senior economist at Hermes Investment Management, explains:
The Bank seems determined to deliver one more hike in the second half of the year, justified by a tight labour market and an economy now working close to potential.
However, there are several reasons to err on the side of caution. In particular, recent hard data on industrial production and surveys on economic activity suggest that the prospects of a significant rebound in economic performance are uncertain following a weak Q1. Moreover, risks of a disruptive Brexit event down the road are still high.
City economist Sam Tombs of Pantheon has spotted that the pound started to rally just before the Bank’s decision was published.
Sterling was trading at $1.310 at 11.50am, but had snuck over $1.313 by 11.59am:
That’s quite a suspicious appreciation of sterling prior to the MPC’s 12pm decision, if you ask me. Was Haldane’s vote switch leaked? pic.twitter.com/h4TZCBpKil