Economic Review – March 2019

Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

Overview

INTEREST RATES REMAIN ON HOLD

The Bank of England (BoE) has once again left interest rates unchanged, whilst reaffirming its belief that near-term monetary policy will remain inextricably linked to Brexit.

INFLATION RATE TICKS HIGHER

While inflationary pressures in the UK remain relatively muted, official statistics did reveal a slight increase in February’s headline rate, with economists predicting further rises over the coming months.

MARKETS

World stocks were broadly higher at the end of the month as progress was made in the US-China trade talks. Investor sentiment lifted after Steven Mnuchin, US Treasury Secretary, called the talks “constructive” and looked forward to continuing the talks in Washington in early April.

BREXIT DEADLOCK

On 29 March, the day the UK should have left the EU, the House of Commons decisively voted to reject Theresa May’s EU Withdrawal Agreement, leaving the Brexit process in a state of turmoil.

UK ECONOMY STUCK IN LOW GEAR

Although official statistics show that the UK economy did stage a comeback during January, the bigger picture remains one of subdued growth as the country continues to grapple with Brexit.