The Bank of England Governor Mark Carney is this week being questioned on how long he will continue in his current role. Carney’s contract was originally put in place until 2018 however he may stay in charge for the maximum full 8-year term.
The Governor has come under recent scrutiny having originally painted a very negative picture of what a Brexit Leave victory might do to the economy. There was an expectation that the UK would suffer a very sharp fall which evidently hasn’t taken place as of yet. There has also been questions as to why when the currency has lost 10% in value was the BoE so quick to cut rates when the economy isn’t nose diving.
On Thursday Carney will answer questions after the Bank’s latest Monetary Policy Committee and no doubt the questions will be about his tenure along with whether the Bank acted too fast, straight after the referendum.
Monetary Policy Decision
The MPC are tomorrow expected to keep the interest rate level on hold at 0.25%, if there was to be a cut its likely the rate would fall to 0.1% and not all the way to zero. The UK economy has benefited from the fall in Sterling over the last few weeks making exports considerably cheaper for the rest of the world. However, there is now a concern that the low Pound may become cause for concern for businesses moving forwards. The initial novelty of everything being cheaper could start to ware off as UK businesses and consumers start to suffer from the weakening of Sterling.
There has already been high profile price hikes in the form of Marmite being increased by 12.5% in Morrison’s supermarket and there is an expectation this trend could continue.
Mark Carney’s speeches in the past have caused major volatility for the GBP/EUR rate and I believe this Thursday will be no different. Carney tends to weaken the value of Sterling so if you do have a requirement to purchase Euros I would consider doing so before the end of the week.