Well what a week!!
New Prime Minster Theresa May is announced: Bank of England HOLDS interest rates: Pound climbs as Hammond is named Chancellor and Bank sticks at 0.5% for now
• New Chancellor ditches emergency budget – plans one a year as normal
• Hammond favours single market, but unknown if Cabinet shares his views
• BoE held interest rates at same seven year level despite forecasts for a cut
• Bank says lack of data post EU referendum to make an informed decision
The pound leapt as Philip Hammond was named Chancellor and the Bank of England held rates – but shares turned down as an expected base rate cut failed to arrive.
Hammond was named as Britain’s new Chancellor, just hours before the Bank of England announced its latest interest rate decision – sticking at 0.5 per cent by a vote of 8 to 1.
The pound spiked against the dollar as the Bank of England revealed the Monetary Policy Committee had voted to hold rates, but the FTSE 100 slid on the news.
Money markets and economists now suggest that the Bank will cut rates in August, when it also delivers its quarterly Inflation Report.
Shortly after the announcement the FTSE 100 fell marginally into the red, down by 3.0 points at 6,668.8, but has since turned up again – trading up 8 points at 6,677.7.1 at 4pm.
Before the decision the index had been trading up 54.1 points at 6,724.56.
The biggest movements were on the currency markets, where the pound jumped 1.6 per cent against the dollar at $1.335, while against the euro is up 1.35 per cent at €1.201.
The Bank of England held fire on delivering a post-Brexit vote rate cut to boost for the economy, but signaled that a cut may be on the cards next month.
Minutes of the highly-anticipated decision by the Monetary Policy Committee showed members voted 8-1 to leave rates at 0.5 per cent, where they have been since March 2009.
The Bank stated that there was a lack of data post EU referendum to make an informed decision on monetary policy.
But the minutes of the MPC meeting did show the economy had been resilient in the run-up to the vote, with the Bank now expecting second-quarter growth to pick up to around 0.5 per cent, from 0.4 per cent in the previous three months.
Most policymakers wanted to wait until the Bank’s quarterly inflation forecasts on August 4 before taking further action, as banks and financial markets have also held up surprisingly well since the vote.
Until the next time Debbie @HoskinFinancial
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