UK: Slower BOE bond purchasing, regional elections and referendum issue
Yesterday, the Bank of England left its benchmark interest rate unchanged at 0.10% and kept the asset purchasing facility largely stable at GBP …
Yesterday, the Bank of England left its benchmark interest rate unchanged at 0.10% and kept the asset purchasing facility largely stable at GBP 895 billion as expected. BOE also slowed down the weekly rate of bond purchases and expects purchases to end in late 2021. Finally, policy makers have revised their growth and inflation forecasts upwards, expecting GDP to reach 7.25% in 2021 and 5.75% in 2022, and see inflation an average of 2.5% in 2021. It was a meeting where investors were looking for clues to the point of monetary tightening, and Britain’s monetary policy evolution, which is a better prototype than Europe in terms of economic recovery, can be considered as a preliminary reference in terms of what the Fed will do in the coming months.
Meanwhile, as tensions continue between Britain and France over fishing rights, both countries are sending naval ships to Jersey Island and surrounding areas to monitor the situation. In the Hartlepool local elections, the Conservatives won with the Labor Party admitting defeat. While BoJo’s popularity increased with the Brexit and Covid-19 vaccines, it was a significant win. This was an area where the Conservatives were normally struggling.
The Scottish parliament elections also took place, as the counts were slower due to the Covid-19 measures, so the results will only be available at the weekend. The Scottish National Party (SNP) is demanding a new independence referendum, saying “Brexit has changed the conditions” after the 2014 referendum. They promised that if they win the elections, they will hold a new referendum, but under the law of 1998, London must allow this. The demand for independence is important; because there are many issues that need to be resolved, such as border control, trade barriers, North Sea oil, the banking system, the EU and NATO membership of an independent Scotland. London probably won’t let the second referendum to take place in a near future.
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