Tag: Strikeout

Political turmoil fanned by Brexit may be the last hurdle for a Bank of England interest-rate increase in August. With the U.K. economy bouncing back and consumers willing to spend again amid good weather and World Cup fever, politics is the big unknown three weeks before Governor Mark Carney and fellow officials announce their next policy decision. For now, investors are betting on a quarter-point hike. Prime Minister Theresa May appears to have survived the loss of two high profile ministers this week, but anger within the Conservative Party over Brexit is keeping alive the prospect of a leadership challenge or general election. Two more Tories quit their party roles on Tuesday, while some euroskeptics are said to be considering a radical last ditch move that could bring down her minority government later this year. While the central bank has always said Brexit may restrain the U.K. economy, it has thus far seemed prepared to push ahead with tightening as the nation thrashes out a deal with the European Union. “If the current political chaos affects negotiations, I’d expect the BOE to be pretty worried,” said Victoria Clarke, an economist at Investec in London. “Why did Davis and Johnson resign in the first place? In June 2017 the BOE’s chief economist Andy Haldane, one of the three officials currently pushing for higher rates, said that year’s surprise election had “thrown up a dust-cloud of uncertainty,” and that he didn’t “think adding a twist or a turn from monetary policy would, in this environment, be especially helpful in building confidence.” What Our Economists Say: “Unlike the run up to the May meeting, the data has been strong enough to justify hiking. Policy makers reversed that rate cut in November last year, raising interest rates to 0.5 percent in the first hike in more than a decade.