Bank of England governor, Mark Carney, gave a dovish statement at today’s press speech.
Following figures on earnings and unemployment from the UK, Carney gave the BOE’s Inflation Report noting that UK growth and inflation forecasts have changed in alignment with global expansion and European stagnation.
Main headlines from Mark Carney’s speech:
“A specter is now haunting Europe –- the specter of economic stagnation.”
Downside risks to growth in earlier projections have crystallized.
The BOE expects annual real pay growth to accelerate to about 2% by close of 2015.
Annual increases in consumer prices could slow below 1 % within months, and will return to the 2% target in three years.
Policy makers and investors cut growth forecasts for the next 2 years due to weak Eurozone growth and possible effects on UK exports.
For the euro area, the BOE reduced its outlook for 2015 to 1.25% from 1.7%.
BOE’s detailed projections show exports falling 1 percent this year, versus a previous expectation for a 2.25% increase.
In 2015, overseas sales will rise 4%, less than the 5.25% previously anticipated.
UK data out today showed a stagnant unemployment rate, remaining at 6.0%, slightly higher than forecast at 5.9%. Whereas the Claimant Count Change that measures the change in monthly unemployment claims, recorded -20.4K, from September’s figure of -18.4K and a forecast -24.9K. Average Earnings Index for 3m/y, was as follows: actual 1.0%, forecast 0.9%, previous 0.7% - one of the few positive figures exhibiting slight movement in wage growth.
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