Highlights of the BOE inflation report press conference 1 November 2018

Opening statement;

  • Fiscal policies shifting to more accommodative stance
  • UK econ is in process of adjusting to new and uncertain relationship with EU
  • UK households resilient to a Brexit that has not yet happened
  • Expectations of households and businesses are diverging from the base case
  • Could be greater than usual short-term vol in econ data
  • The BOE is ready to respond no matter what the Brexit outcome is
  • Sterling might appreciate if there is a smooth Brexit transition
  • Disruptive Brexit could lead to some further depreciation (no flies on Carney)
  • Econ is broadly in balance and inflation is above target in contrast to before referendum
  • Mon pol can do little to offset large negative supply shocks
  • MPC could extend horizon over which it returns CPI to target, if post-Brexit shock to demand is greater than supply


  • Brexit no deal & no transition is not the most likely scenario
  • Hit to supply would be more rapid than advanced economies are accustomed too
  • It would be a challenge for us to distinguish between temporary and persistent effects from any no deal
  • We do expect a rebound in demand after a Brexit deal but it depends on the deal outcome
  • We are at the point of close to maximum uncertainty over Brexit
  • Businesses are taking a very cautious approach right now
  • Market rate expectations curve leaves inflation a bit above target in year two
  • We expect growth to slow below potential in Q4
  • UK has large an persistent pass through to inflation of FX moves

Well, what a dull affair. The UK press failed miserably to put any question of remote interest across, choosing to badger Carney about possible Brexit outcomes, all of which are out of his hands and remit anyway. The BOE can only react to what’s served up to them.

Further lips service was made to some of the bullish comments in the statement but only briefly and not expanded on to any great degree. The only other thing to pull from it is a possible insinuation that the market might be a touch behind the curve on its view of rates vs inflation expectations. A minor point missed by most there today.

And that was it. Carney sailed through without having to break a sweat.

GBPUSD isn’t for turning it seems as it remained above the 1.2900 throughout but but did not trouble the 1.2934 high again.

Ryan Littlestone

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