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The first BOE meeting of the year was a decidedly dovish affair with the BOE keeping rates on hold, as expected. It did, however, sharply revise growth lower amidst ongoing Brexit uncertainty.
In one of the largest revisions to short-term growth forecasts since the June 2016 Brexit referendum, the BOE revised down its 2019 forecast to just 1.2% from the prior 1.7% forecast at the bank’s last “Super Thursday” meeting in November.
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The main reason for this downward revision is, of course, Brexit. The BOE chief, Mark Carney, explained that the economic outlook had worsened in light of elevated uncertainty around the fractious Brexit negotiations.
He stated that in the event of a “no deal” Brexit, the risk of a recession would rise greatly. Carney affirmed:
“When the economy is growing more slowly, the probability of having a negative quarter or two goes up… and if there ...
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