Szu Ping Chan
Business Reporter, BBC News

Image source, PA Media

Mr Carney says the extra cash the Treasury has set aside for no-deal Brexit planning represents a “recognition that more needs to be done”.

The press conference ends with a simple question: are the Bank’s forecasts too gloomy?

While he says the jobs market remains robust, Mr Carney adds the Bank is clear that Brexit has led to uncertainty in the business community which has translated into less spending and investment.

Also, the initial boost to trade from the weaker pound is starting to fade. “These consequences are there,” he says.

Szu Ping Chan
Business Reporter, BBC News

Image source, EPA

The Federal Reserve has just cut interest rates for the first time since 2008. Meanwhile, Mario Draghi, the president of the European Central Bank (ECB), recently signalled that policymakers are ready to cut rates this autumn.

Mark Carney says the Bank of England is facing a very different scenario to the ECB. Wages are growing at a stronger pace, unemployment is a lot lower and inflation is at the Bank’s 2% target.

He adds that the Federal Reserve had previously been on a “long hiking cycle”, and the cut yesterday represents an adjustment to that.

Image source, EPA

"The Monetary Policy Committee is holding its nerve and not rushing to serve up more stimulus, just because markets expect it," says Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"Granted, the committee has dropped its long-standing line that an 'ongoing' tightening of monetary policy will be required, if the economy evolves in line with its projections. That implies that a rate hike is unlikely within the next six months, even if a no-deal Brexit is averted," he says.

"All in all, the Committee remains in wait-and-see mode; we still look for two increases in bank rate in 2020, provided the UK avoids a no-deal outcome at the end of October.

"In the event of no-deal, we expect bank rate to be cut to its effective floor of 0.05%, in three consecutive steps".

Szu Ping Chan
Business Reporter, BBC News

Image source, Getty Images

Earlier today, President Trump’s former economic adviser Gary Cohn told the BBC that a no deal Brexit would be better than the current deadlock.

Mark Carney is asked to react to this. He disagrees and describes no-deal as the “crystallisation of a bad economic outcome”, which he says is not preferable.

He says the UK is “one of the most flexible economies in the world” with a robust and vibrant financial sector.

However, he adds that it would be “difficult to change things overnight”.

BBC Economics Editor Faisal Islam tweets:

Szu Ping Chan
Business Reporter, BBC News

The BBC's economics editor Faisal Islam asks if it’s right that Downing Street should assume that the Bank won’t ride to the rescue with interest rate cuts if there is a no-deal Brexit.

Mark Carney begins his response with two words: It depends.

The Bank has two jobs. It is supposed to support growth, and it can cut rates to boost the economy. Its job is also to keep a lid on inflation by raising interest rates to cool the economy.

He says the Bank’s response depends on how prepared businesses are for a no deal, how quickly the UK can arrange side deals to minimise trade disruption and how quickly everyone adjusts to the new normal.

He says some activities that “used to be economic” will no longer be so. In other words, some companies will go bust. How the Bank reacts will depend on how the economy adjusts to this. “We would need to take a judgement,” says Mr Carney.

“We will do what we can to support jobs and activity, but there are limits to what we can do”.

Szu Ping Chan
Business Reporter, BBC News

Mark Carney, Bank of England Governor, says one important message to take away from today’s Inflation Report is that if there is a smooth Brexit, interest rates will have to rise over the next few years to ensure the UK remains on a path of steady growth and inflation.

The public have heard this message, he adds.

He stresses that it is “more complicated” in the event of no-deal, repeating a previous message that policymakers won’t automatically cut interest rates to support the economy because of the implications that might have for prices.

Szu Ping Chan
Business Reporter, BBC News

Image source, Getty Images

Where does the Bank of England go from here? Mark Carney says there are a “wide range of paths”.

He says the Bank has been working with institutions since the June 2016 referendum to ensure they are ready for Brexit “whatever form it takes”.Commercial banks have large enough cash buffers in place to deal with the most severe of scenarios, he adds.

However, Mr Carney stresses that “financial stability is not the same as market stability”.

He says a no-deal Brexit would likely lead to a weaker pound, and turbulence on financial markets. He says that while businesses can prepare for no-deal, those preparations cannot “eliminate adjustments that moving to a new trading relationship would entail”. In other there is no smooth no deal scenario.

And while most businesses are ready for Brexit, Mr Carney says just a fifth are fully ready.

Szu Ping Chan
Business Reporter, BBC News

Image source, Reuters

Governor Mark Carney begins his press conference saying that uncertainty over Brexit has intensified, while the perceived likelihood of no deal has “increased significantly”.

Global trade tensions have been more “pervasive, persistent and damaging” than initially thought. This is also weighing on the outlook. Expectations of interest rate rises around the world have receded as a result. Mr Carney stresses that the outlook for the UK economy will “hinge on the nature of EU withdrawal“ and how that affects consumers and businesses.

He stresses that the next move in interest rates will depend on this and that it could be up or down.

Image source, Getty Images

PwC, senior economist Mike Jakeman, says interest rates remain on hold until there is clarity about Brexit. "It was no surprise that the Bank of England kept interest rates on hold. Uncertainty in the UK economy remains acute, given the multiple different Brexit scenarios that are still in play.

"We expect the Bank to keep rates on hold until a clear outcome on Brexit has been determined. Lower interest rates are likely in the event of a no-deal scenario, while if a deal is struck and economic growth is maintained, the Bank would be likely to pursue its previous course of raising interest rates slowly.

"For now, inflation is not a major issue, as it remains close to the Bank's target of 2%.".

"Policymakers are understandably in ‘wait-and-see’ mode, until the shape of Brexit becomes clearer. Inflation is exactly meeting the Bank’s inflation target of 2% at present, but in truth the target will always play second fiddle to the need to provide monetary support in a crisis," said Ben Bretell, senior economist at Hargreaves Lansdown.

"Market predictions over the future direction of rates have shifted in recent weeks. Boris Johnson’s appointment as PM is generally thought to have increased the chances of a no-deal Brexit – a scenario in which the Bank could be forced to cut rates to support the economy.

"A rate cut by the end of the year is now seen as more likely than not, whereas earlier in the year the talk centred on when rates were likely to rise."

The pound didn't move much after the Bank of England's quarterly report came out. It's still trading just above $1.21 to the dollar.

Against the euro it's at 1.0978.

As if we didn't know already, the Bank of England says that economic forecasting, is particularly tricky right now.

It said: "Increased uncertainty about the nature of EU withdrawal means that the economy could follow a wide range of paths over coming years.

"The appropriate path of monetary policy will depend on the balance of the effects of Brexit on demand, supply and the exchange rate.

"The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.

"In all circumstances, the [Monetary Policy Committee] will set monetary policy appropriately to achieve the 2% inflation target."

In its quarterly Inflation Report, the Bank of England said global trade tensions were weighing on the outlook for the UK economy.

As well as that downgrade the economy for this year to 1.3%, it also cut its forecast for growth in 2020 to 1.3%, from a previous projection of 1.6%.

Image source, Getty Images

As expected the Bank of England has kept interest rates unchanged, external at 0.75%.

The Bank has cut its growth forecast to 1.3% from 1.5%.

However, those forecasts are based on a smooth transition to a post-Brexit situation.

Dharshini David
Economics Correspondent

Back in February, the Bank of England estimated a 5% drop in the value of the pound adds about 0.3% to annual GDP growth a year out - so by 2020 as it takes a while to feed through - and it also bumps up inflation by 0.3% in the next two years.

The pound is about 5% below the expected level. So, depending on other factors, that could push inflation further above target in the next two years.

In May, Bank of England governor Mark Carney admitted to me that rates would have to rise faster than the markets expected in the event of a deal.

Developments since highlight the rates dilemma the Bank could face in event of a disruptive no-deal: hike to tame inflation or cut to support activity?

Image source, Getty Images

Neil Wilson, chief market analyst at Markets.com, says the fall in sterling through $1.21 is not just about Brexit and is, in part, about the rate cut announced by the US Federal Reserve.

"Brexit no-deal thoughts have weighed cable [the dollar/pound rate] down, but the latest leg lower seems to be the result of the pressure of dollar strength as the Fed was a little more hawkish than expected.

"The Fed’s mixed signals have been taken to mean one fewer cut this year, driving the dollar higher versus major peers on a simple rate differential expectation.

"And there is no respite for pound traders. Coming up in a few minutes we have the Bank of England and while there is no expectation for the [Monetary Policy Committee] to move on rates today, there is a lot of uncertainty around forward guidance, the growth outlook and the Bank’s view of inflation pressures in light on the recent downturn in the pound".

Image source, Reuters

Barclays reported a pre-tax profit, external of £1.53bn in its second quarter, up from £1.48bn in the same quarter last year.

"After a difficult Q1, when profits came in below the level a year before, Q2 appears to have been a much better quarter for Barclays," said Michael Hewson, chief market analyst at CMC Markets.

"This would appear to be a welcome boost for CEO Jes Staley whose strategy for turning the bank around has come under fire from activist shareholder Edward Bramson, of Sherborne Capital who earlier this year failed with an attempt to gain a seat on the board and who wants management to divest the underperforming investment bank.

He notes that the investment bank had a decent quarter.