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Interest rates - higher or lower?

Today Programme

BBC Radio 4

Bank of England
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The political chaos of Brexit is likely to have an impact on how the Bank of England sets interest rates over the next year.

"If the deal gets through parliament, if we have a transition period, we think the Bank of England will be raising interest rates but not till later next year," Sarah Hewin, Europe economist at Standard Chartered tells the Today programme.

"If we crash out of the EU, then the expectations should be that with a weak economy, the Bank of England would not increase interest rates - it might even cut rates."

However, a no-deal Brexit could also lead to an interest rate rise.

"The Bank of England's Monetary Policy Committee has said, 'don't expect it to be one way'. Supply is going to be severely interrupted if we crash out of the EU with no deal," she says.

"That would raise inflation, we'd see higher tariffs which would also cause a fall in the value of the pound, and so the Bank of England might decide that we need to raise interest rates."

Let the war games commence

Cyber attack illustration
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The Bank of England is testing the UK's ability to withstand a major cyber-attack on financial institutions.

Some 40 firms, including leading banks, are taking part in a one-day "war-gaming" exercise designed to assess their resilience.

The bank is conducting the exercise in partnership with regulators and the Treasury.

It wants to ensure that firms are able to meet certain minimum recovery standards after a cyber-attack. "The exercise will help authorities and firms identify improvements to our collective response arrangements, improving the resilience of the sector as a whole," the bank said.

Former bankers fined

Building
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Two former directors of an arm of Bank of Tokyo-Mitsubishi have been fined by the Bank of England over events that date back to 2014.

Akira Kamiya, former chair of one of the Japanese bank's London operations, has been fined £22,700 and Takami Onodera, a former non-executive director, £14,945.

It relates to a $315m fine in 2014 by the US authorities for watering down a report about transactions involving Iran and other sanctioned countries.

The Bank of England's regulatory arm, the Prudential Regulation Authority, said the pair failed to disclose the possibility Mr Kamiya would be restricted from conducting US banking activities as a result of this action.

It said it did know about the sanction until was published.

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Broadbent warns of Brexit 'disruptions'

Today Programme

BBC Radio 4

Bank of England
Reuters

A disorderly Brexit would have damaging consequences for the British economy, according to the deputy governor of the Bank of England.

While no deal was still “unlikely”, Ben Broadbent said ripping up current trading arrangements with the European Union would cause disruption.

“In the unlikely event of a departure without an agreement I think there would be many disruptions,” he said. “Ours is an economy that has become adapted to pretty seamless trade in the EU. Were you suddenly to change those rules, I think there would be some disruption.”

Brexit will determine rate move - Broadbent

Today Programme

BBC Radio 4

Ben Broadbent
PA

Ben Broadbent, deputy governor of the Bank of England, said the next move in interest rates would depend on how markets, households and businesses reacted to the UK’s departure from the EU.

He said that while "no deal" could hit economic growth, suggesting the Bank would need to cut rates, it could also trigger another fall in the value of the pound, which would push up inflation.

The Bank noted in its Inflation Report on Thursday that household spending had been stronger than expected in recent months amid stronger pay growth.

It added that businesses have adopted a cautious approach to Brexit. Governor Mark Carney said many companies had reached the point of “maximum uncertainty” over Brexit and had put a pause on investment.

That said, he added that “significant” spending measures in the Budget were likely to boost spending and economic growth.