Commenting on Carney’s speech and sterling’s sharp drop, Joshua Roberts, Associate Director at JCRA, said: “Carney’s statement offered a tepid outlook for UK growth, with downgraded forecasts for 2020 and 2021.
“Interest rate expectations and the pound dropped sharply in response, both to the forecasts themselves and to the confirmation that they had been predicated on the assumption that Base Rate would be lower in 2022 than it is at present.
“That said, in the run up to one of the most divisive general elections in recent history, the relevance of the Bank’s forecasts is questionable. As is customary, they are based on current government policy – i.e. the passing of the Withdrawal Agreement negotiated by Boris Johnson. Market participants may be understandably hesitant to rely on this assumption.”