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The British Prime Minister Theresa May wrote a letter to the EU leaders in which she asked for a delay to the UK’s departure from the EU bloc until June 30th 2019. Media sources suggested that the President of the European Council (EC) Donald Tusk will receive the letter today, just one day before the EC convenes.
A CNBC report said that the President of the European Commission Jean Claude Juncker reiterated that there would be no re-negotiations of the Brexit deal. However, he also told reporters that it’s “highly probable” that the UK won’t be leaving the EU on March 29th as it was scheduled. The EC’s President said that if the UK’s government wants an extension on Brexit, it should bring clear plans to the EU Summit.
A delay on the Article 50 process won’t be an easy thing as all 27 EU countries will have to agree on it. The French minister for European Affairs commented that the EU members “need something new” from the British side, expressing fears that the deadlock in the negotiations might remain despite an extension.
The Bank of England decides on interest rates
One more “Super Thursday” for the Bank of England has come. On March 21st 2019, the BoE’s board will convene to decide on interest rates. Market analysts forecast that the BoE will keep its benchmark interest rate unchanged at 0.75% with all 9 members of the Monetary Policy Committee (MPC) voting in favour. The last time that the BoE raised borrowing costs was after its board meeting on August 2nd 2018.
Analysts at TDS wrote in a report published on March 20th 2019 that they expect the BoE to remain on the sidelines as Brexit uncertainty grows. “The UK economy is broadly tracking in line with their February 2019 forecasts. With Brexit headlines intensifying, and the Federal Open Market Committee (FOMC) meeting tonight, markets remain fluid ahead of the BoE’s meeting.,” was noted in the report. TDS analysts suggested that “we do not expect this month’s MPC to provide the British Pound with a major directional push as Brexit concerns dominate.”
UK Consumer Price Index Inflation (CPI) Rises
On Wednesday March 20th 2019, the Office for National Statistics (ONS) released data regarding the UK’s CPI inflation in February 2019. Although economists were expecting that the CPI inflation would have remained stable at 1.8%, ONS data showed that it rose slightly to 1.9% on an annualised basis.
The ONS report attributed the rise to the rising prices for food, alcohol, tobacco and for various recreational goods. Economists at KPMG argued that even this small pick up in headline inflation raises the chances for an interest rate hike just before Christmas 2019. “Solid wage growth and minimal spare capacity could encourage the BoE to raise rates once more by November 2019 to 1%,” the KPMG analysts said.
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