Jan 31, 2020 - Economy & Business

Bank of England holds interest rates steady before Brexit

Governor of the Bank of England Mark Carney. Photo: Jonathan Bradt/POOL/AFP via Getty Images

The Bank of England held interest rates at 0.75% Thursday as governor Mark Carney, in his final policy meeting, said "the most recent signs are that global growth has stabilized."

Yes, but: The BOE cut its growth expectations for Britain to 1.1% for the next three years, down from 2019's 1.4%. The projections are England's lowest since World War II.

  • “We no longer expect much of a pick-up [in productivity growth],” Ben Broadbent, BOE deputy governor for monetary analysis, said after the meeting.

Between the lines: Markets had priced in a 50% chance the central bank would cut rates after a string of unimpressive data, including its latest GDP report showing Britain's economy shrank by 0.2% in the second quarter and grew by just 0.4% in the third.

The big picture: The decision came just a day before Britain exits the European Union. The British pound moved to over $1.31 against the dollar and government bond yield rose.

Go deeper: Boris Johnson: U.K. has crossed the Brexit finish line now bill is ratified

Go deeper

The U.K. finally goes through with Brexit

Photo: Kirsty Wigglesworth/AP

An image of the clock face of Big Ben was projected on 10 Downing Street, residence of British Prime Minister Boris Johnson, as Britain officially left the European Union at 11 p.m. London time.

Why it matters: "In its biggest shift since losing its global empire, [the U.K. turns] its back after 47 years on the post-World War Two project that sought to build the ruined nations of Europe into a global power," Reuters writes.

Go deeperArrowFeb 1, 2020 - World

Market overwhelmingly expects rate cut next month

Data: CME Group; Chart: Naema Ahmed/Axios

In one week, futures traders have gone from seeing virtually no chance of a rate cut at the Fed's next policy meeting to a more than three-quarters likelihood.

Why it matters: Economists aren't sure a rate cut would be effective at offsetting the damage from the coronavirus outbreak, and would put the Fed in a weaker position to bolster the economy should the U.S. fall into a recession.

How Trump’s economy stacks up

Source: "Presidents and US Economy", Trump figures through 2019 courtesy of Alan Blinder; Note: Data shows real GDP and Q1 growth in each term is attributed to the previous president; Chart: Axios Visuals

Average economic growth under President Trump has outpaced the growth under Barack Obama, but not all of his recent predecessors.

Why it matters: GDP is the most comprehensive economic scorecard — and something presidents, especially Trump, use as an example of success. And it's especially relevant since Trump is running for re-election on his economic record.