Bank of England (BoE) Governor Mark Carney has told the UK Cabinet that a no-deal Brexit could lead to an economic slump and a 35 per cent fall in house prices. As part of The BoE’s preparations for the worst-case scenario post Brexit, he also suggested the central bank would be unable to cut interest rates like it did in the past and inflation and unemployment would soar.
However, Carney also suggested the UK economy would outperform current forecasts in case a Brexit deal based on the Chequers plan is reached. Meanwhile, yesterday, 13 September the BoE left interest rates unchanged.
The European Central Bank (ECB) also left its benchmark interest rate unchanged and reiterated its intent to end its bond purchase programme this year and to raise interest rates in autumn 2019.
US inflation figures were the big surprise yesterday as they revealed a dip in the pace to 2.2 per cent in August. It could be transitory, but it gives the Federal Reserve a reason to pause. Analysts previously expressed concerns over risks of the US economy overheating, but now that inflation is easing, there is even less evidence that this is the case.