Government Policy

  • 2018-12-05 10:30

    --Hard For BOE To Provide Monetary Stimulus On No Deal Scenario: Hammond

    LONDON (MNI) - In the event of a 'no deal' Brexit for the UK, fiscal, not monetary, policy would be the primary vehicle to try and offset the economic hit, Chancellor of the Exchequer Philip Hammond told the Treasury Committee Wednesday.

    Hammond was giving evidence on the government economic service's Brexit scenarios, which were released Wednesday, along with the Bank of England's work on Brexit.

    The following are key points from Hammond's evidence:

    --All the Treasury Brexit scenarios showed a higher debt-to-GDP compared to remaining in the EU. Hammond was asked if it was, therefore, misleading to talk about a "Brexit dividend" for the public finances.

  • 2018-11-28 13:18

    By David Robinson

    LONDON (MNI) - Brexit will be primarily a supply shock to the UK economy and departing the EU without a deal could force Bank Rate sharply higher, the Bank of England assumed in its scenario analysis published on Wednesday.

    Its assumptions come with a host of caveats, including that there is no offsetting fiscal stimulus. Nevertheless, the Bank's analysis hammers home how it cannot be assumed monetary policy will be eased if the government cannot get its proposed withdrawal deal through parliament.

    In its worst case disorderly Brexit scenario, with lots of border friction, no transition and no deal, the BOE showed Bank Rate rising from its current 0.75% to 5.5% and averaging 4.0% over the three subsequent years.

  • 2018-11-23 08:27

    By Luke Heighton

    FRANKFURT (MNI) - Talks over the eurozone's Capital Markets Union and the completion of the Banking Union are being held up by "technical nit-picking, with self-satisfaction from some, disparagement from others, and distrust on all sides", the head of the Central Bank of France said Friday.

    However Paris stands ready to inherit London's role at the centre of the global derivatives market as Europe restructures its financial system post-Brexit, Francois Villeroy de Galhau added.

    Here are the key points from the speech in Paris:

    -- Banque de France analysis supports research by the ECB and the Bank of England which did not identify any major risks to eurozone financial stability from an orderly Brexit.

    -- In the event of a No-Deal Brexit, the c

  • 2018-11-12 05:05

    By David Robinson

    LONDON (MNI) - Markets may be under-pricing the likelihood of Bank of England rate hikes in the event of a smooth Brexit, Deputy Governor Ben Broadbent said.

    The UK economy is showing signs of generating further domestically-generated inflation, with unemployment rates around a 40-year low and Broadbent anticipated further increases in average earnings.

    Despite news reports suggesting fluctuating chances of a Brexit deal, an agreement allowing a smooth transition to a longer-term trading relationship "is still the most likely outcome," Broadbent told CNBC in an interview.

    "Every day there are headlines, positive, negative, which will send the currency in particular in one way or another," Broadbent said.

    But a smooth Brexit transition "still

  • 2018-11-05 12:58

    -Government Economists, Like BOE, To Issue Brexit Deal/No Deal Analysis

    LONDON (MNI) - The UK parliament will be given ample opportunity to study the likely impact of a withdrawal agreement with the EU before having to vote on it, the country's finance minister told the cross-party Treasury Committee Monday.

    The following are key points from Chancellor of the Exchequer Philip Hammond's testimony on the 2018 Budget:

    --Hammond said that once a Brexit withdrawal agreement was completed economists across government would complete a full analysis of its likely impact.

  • 2018-10-31 12:15

    By Luke Heighton

    FRANKFURT (MNI) - Appropriate central bank responses to any downturn in the world economy caused by trade disputes are unclear, Swiss central bank governor Thomas Jordan said on Wednesday.

    Here are key points from the speech in Berne, Switzerland:

    -- The optimal monetary policy response for a central bank is in the case of a negative supply shock or an abrupt and hefty rise in tariffs is therefore "not immediately obvious", Jordan said, and it is difficult to predict how central banks would behave "in the event of a fully fledged trade war".

    -- Current tariff impositions "will not plunge the world into a recession. Any such fears are exaggerated".

  • 2018-10-29 14:00

    WASHINGTON (MNI) - The U.S. Treasury Monday estimated it will borrow $425 billion of net marketable debt in the fourth quarter of 2018, assuming a $410 billion cash balance on December 31.

    Previously, the Treasury estimated it would borrow $440 billion in the quarter, with a $390 billion cash balance at the end of December.

    The lower borrowing estimate was due to "changes in cash balance assumptions," the Treasury said.

    In the third quarter of 2018, Treasury borrowed $353 billion, while the end-of-quarter cash balance was $385 billion. Treasury had previously estimated it would borrow $329 billion in the third quarter, assuming a $350 billion cash balance on September 30.

  • 2018-10-26 11:45

    By Luke Heighton

    FRANKFURT (MNI) - Central bank independence is under threat, ECB President Mario Draghi said today, as governments are increasingly prepared to favour short-term objectives over price stability.

    Draghi warned of a return to 1970s-style inflationary and price instability if monetary policy were to become subject to political pressure.

    His remarks come amid growing concerns over the destabilising effect of Italy's budget negotiations with the EU, and in the wake of President Donald Trump's recent attack on the Fed,

    Here are key points from the speech at the National Bank of Belgium in Brussels:

    -- Outside the eurozone we see concerns being publicly expressed about whether the central bank should pursue a normalization path in the face of rising

  • 2018-10-25 18:01

    By David Robinson

    LONDON (MNI) - The UK government would fail to meet a key fiscal goal in the event of a hard, or no deal, Brexit and the Bank of England Monetary Policy Committee (MPC) may have to leave policy on hold rather than responding by easing, the National Institute of Economic and Social Research said.

    The NIESR published its quarterly forecasts on Friday, with additional work on the UK Budget which is revealed on Monday and on Brexit scenarios. Following are key points raised:

    --The NIESR distinguished between a no deal, but orderly, Brexit and a disorderly one.

  • 2018-10-15 18:01

    -Budget Comes Too Late To Influence BOE Nov 1 Inflation Report

    LONDON (MNI) - The UK government is likely to add fiscal stimulus in its Oct. 29 budget, according to a detailed preview by the Institute for Fiscal Studies (IFS).

    Below are main points from the preview, which was produced in collaboration with the Institute of Chartered Accountants of England and Wales and Citi economists. The budget will come too late for it to be included in the Bank of England's Inflation Report, to be published on Nov. 1.

    --While Prime Minister Theresa May declared the end of austerity at the ruling Conservative Party's conference this month, the IFS said such a goal is wide open to interpretation and could be costly.