Spreadex Market Update
Carney warns of post-Brexit shock on controversial Bank of England Super Thursday
Ruffling more than a few feathers Mark Carney used the central bank’s inflation report to outline the risks posed by a potential Brexit. With the MPC chief labelling it the ‘elephant in the room’ during his post-report conference the central bank stated that ‘a vote to leave the [EU] could materially affect the outlook for output and inflation’, going on to say that a Brexit would likely cause a sharp depreciation in sterling and would complicate the BoE’s decision over raising, holding or indeed cutting rates going forward.
Talking of rates the MPC unsurprisingly kept them unchanged at 0.5%; slightly more surprising was the fact that it was a unanimous decision given the morning’s talk of a potential dovish vote from one or two of the committee members. As expected growth forecasts for 2016 were cut to 2% from the previously stated 2.2%, understandable considering the procession of dismal data that has made up the UK’s economic calendar of late. All this helped to shepherd the FTSE back into the red, the index falling by more than half a percent as Thursday wore on.
Elsewhere the Eurozone indices, perhaps similarly spooked by Carney’s Brexit warning, lost their lunchtime lustre, the DAX especially plunging by nearly 1%. The Dow Jones, meanwhile, quickly abandoned its early gains, the index’s decline fuelled by an unexpectedly weak import prices figure and the worst jobless claims number since the third week of January.
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