Bank of England Revises Up Growth Forecast, Again

The pessimists at the Bank of England slashed their growth forecasts almost immediately after the Brexit vote. The economy proved resilient, prompting an upwards revision from 0.8% to 1.4% in November. Today on the BoE’s Super Thursday the Bank yet again revises up its 2017 GDP growth forecast to 2%. Obviously this beats the predictions of all city economists. Michael Fish eat your heart out

Carney: Brexit Risks Have “Gone Down”

Some prize comments from Mark Carney which went under the radar in the excitement of Trump yesterday. The Bank of England governor now says he is “surprised” his forecast of an immediate post-Leave vote slump has not come true, admitting the BoE is “very likely” to improve its economic forecasts:

“Of course having got through the night the day after the scale of the immediate risks around Brexit have gone down.”

Apparently the EU now has more to worry about than us:

“there are greater financial stability risks on the continent in the short term for the transition than there are for the UK”

The stock market is enjoying a bull run and breaking all records. In November the BoE already doubled its forecast for 2017, the biggest single upgrade it has ever made to a prediction, and now it is likely to upgrade it again. Experts…

UK Industrial Production Surges, Small Businesses “Confident”

UK industrial production is up 2.1%, way up on a gloomy 1% estimate. The latest figures are for last November and year-on-year the indicator is now +2%. Experts wrong again…

The news comes after the Federation of Small Businesses reported its members confidence had “bounced back” after Brexit. Chairman Mike Cherry said:

“The current economic outlook seems brighter, and UK small businesses are ambitious and want to make the most of it.”

Brexit Britain confident and productive…

Carney on Not Being Helpful

Mark Carney explains the Bank of England’s forward guidance…

“The thing about forward guidance is that it is guidance that is forward. Which isn’t to say it’s meant to be in any way accurate. Indeed, it would be surprising if it were. The most important thing about forward guidance is that the underlying economic determinants should be correct, not that it should be helpful.”

Brexit Inflation and Interest Rate Signals

carney-cpi

The Bank of England’s inflation target is 2.0% – with the fall in the pound inflation is set to overshoot to between 2.5% and 4.5% depending which rune reading economist you believe. When the 2% target is missed by 1% or more Carney has to write to the Chancellor explaining why he has missed his target. He’s been writing those letters for most of his term…

Inflation has now crept up to 1% after knocking along at zero for a while. Even at the extreme end of forecasts inflation will not reach the levels seen before the great taming of inflation in the 80s. (Unless the QE unwinding is a disaster, which is not impossible.) Having read many papers on the subject Guido is none the wiser as to how the world’s Central Banks can go cold turkey from the QE opiate without a very bad come down. In any event, at these levels interest rate policy is now symbolic, market loan rates are increasingly detached from base rates. Firms are not going to make or break investment decisions because base rates are 0.25% or 0.5%.* May is right that we need to see rates rising, to head off inflation and to boost confidence.

Nothing would more clearly signal that the Brexit apocalypse is not upon us than the Bank raising base rates. Normalisation of monetary policy has to happen. Or at least the Bank should signal the beginning of normalisation…

*Fans of reflexivity and paradox will contemplate the post-referendum rate cut with joy. Carney implies it boosted the economy, critics say it was unnecessary. Did it boost confidence that the Bank of England was ready to do whatever or was it a way for Carney to claim credit for his gloomy predictions not coming true?

FT Carney Exclusive Stays Exclusive

ft

Contrary to the front page of this morning’s FT, Mark Carney will not serve a full 8 year term at the Bank of England, he will step down two years short of that in June 2019. Oops…

Anyone for Brexit? Mark Carney’s Day Off at Wimbledon

carney at wimbledon

Three days ago Mark Carney told us how he was “rapidly putting the main elements of a plan” into place to deal with an “extended period of uncertainty” post-Brexit. Well the plan must be going pretty well since Carney has taken the day off to watch the tennis at Wimbledon with Jude Law. He was watching Roger Federast…

Project Fear Over

Boris praises statements from Carney and Osborne…

“Clear that Project Fear is now over.”

Carney: We Will Make Brexit Work

This is what the BSE campaign’s Will Straw press released following Mark Carney’s speech on the EU last month:

“The Governor of the Bank of England has now overwhelming made the case that our membership of the EU single market increases our stability, our dynamism, and our economic growth. Day by day, one by one, the out campaigns’ economic arguments are falling apart… the person responsible for maintaining Britain’s financial stability [has] unambiguously underlined the value to the UK economy of our place in the EU, and that Britain is stronger, safer, and better off inside Europe than we would be out on our own.”

Are Remainers telling the truth when they claim Carney “overwhelmingly” and “unambiguously” reckons Britain will be weaker, less safe and worse off outside the EU?

The Bank of England governor was on Sky News this morning, where he slapped down the scaremongers by insisting he will make Brexit “work” if that is what “the British people decide“.

“Our job is to make whatever the British people decide work. And there’s a status quo, we’re making that work and we think it is working, but if things change we will do what’s necessary.”

It is also worth pointing out that Carney is also on the record warning “the majority of the legislation and regulation applying to the financial sector in the UK is determined at EU level”, and that the EU was “a key link in the chain” by which the financial crisis affected Britain. Don’t believe the BSE spin: Carney’s actual “unambiguous” position is that the Bank of England will be able to do its job whatever the outcome of the referendum…



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A friend of David Cameron responds to his request for a lunchtime game of tennis:

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