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No deal Brexit remains key factor for rise in interest rates

29th October 2018

As we move towards another Monetary Policy Committee meeting on 1 November the main threat on interest rates remains a no deal Brexit.

The third quarter of 2018 has seen a mixture of economic data that influences the decision. On the positive side:

1) GDP rose by 0.7%

2) Wage growth increased by 3%

3) Inflation reduced to 2.4%

4) Unemployment reduced to the lowest levels for 43 years

And on the negative side:

1) Retail figures slowed

2) Stock markets suffered their worst falls of 2018

3) Industrials highlighted weakening order books and export figures

The likelihood of a base rate rise in November remains unlikely, with predictions of no further rate rises until 2019 still holding firm.

However, if a no deal Brexit becomes a reality the Bank of England will be forced to protect a weakening pound and an unpredictable outcome on base rates.

November Prediction – No Change


Source:

Guardian 24/10/18

https://www.theguardian.com/business/2018/oct/24/britains-last-budget-before-brexit-needs-to-be-bold-experts-debate-data

Reference – BL041 – Oct – 18

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