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IMF sees no scope for UK interest rate cuts

Reuters: [2008-05-23 19:34:00]

LONDON, May 23 (Reuters) - Britain's central bank must be ready to raise interest rates at the first clear sign of higher wage settlements and there is no room for rate cuts now, the International Monetary Fund said on Friday.

"We see no scope for further near-term monetary easing, absent assurances of continued wage moderation, fiscal policy that is tighter than planned, or signs that house price or credit developments are significantly curbing domestic demand," the IMF said in a report on the UK economy.

"Given the risks to the nominal anchor, monetary policy should stand ready to tighten at the earliest clear signs of emergent nominal wage inflation," it said.

(Reporting by Matt Falloon) ((david.clarke@reuters.com; +44 207 542 7947; Reuters Messaging: david.clarke.reuters.com@reuters.net))

Keywords: BRITAIN IMF/

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Reuters: [2008-05-23 16:00:00]

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> ***SNAPSHOT - WORLD KEY OFFICIAL INTEREST RATES***  [INT/RATE] 
> FACTBOX-Global interest res                     [GLOBAL/INT] 
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> BOJ minutes: board agreed global economic risk    [nTKU003295] 
> Highlights-Bank of Japan policy board minutes       [nT181356] 
> EU's Almunia warns against abrupt policy moves    [nMDT005225] 
> UK set for "significant slowdown" -BoE's Sentance  [nL2388366] 
> SNB says ready to bail out banks in case of need  [nZAT007740] 
> POLL-Norway c.bank seen keeping rate steady May 28[nL23777710] 
> Stalemate at Ukraine cbank remains unresolved     [nL23673863] 
> Poland held rates in April on growth,zloty-minutes[nL23842952] 
> Hungary government urges c.bank to hold rates     [nL23149063] 
> India cbank alters valuation rules for special bond[nBOM49671] 
> Russia c.bank sees May capital inflows at $20 bln [nL23523662] 
> Asia shifts priorities as inflation threatens      [nSP258841] 
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> The outlook for Federal Reserve policy             [FED/AHEAD] 
> Reuters coverage of Basel II accord            [ID:nL10281706] 
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| Swiss Nat Bank      June 19 | Norges Bank             May 28 | 
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 ((David Stamp; London Treasury Desk +44 207 542 7716)) 
  

Britain set for "significant slowdown" -BoE's Sentance

Reuters: [2008-05-23 15:15:00]

LONDON, May 23 (Reuters) - Britain looks set for a "significant slowdown" but is likely to avoid recession, according to Bank of England Monetary Policy Committee member Andrew Sentance.

Speaking to Warwick University's student radio station earlier this week he said it was hard to know how hard the credit crunch would hit the real economy.

"You can't totally rule that (a recession) out, because we are vulnerable to shocks from the external economy, and we are dealing with some things, pressures from the financial markets, that are very difficult to calibrate and to understand at the moment," Sentance said.

"So our best assessment is that the forecast is not for recession, but what we do expect to see is quite a significant slowdown in growth, and in some sectors of the economy that will be felt more significantly than others."

Sentance said it was important that the public trusted the central bank would act to keep inflation under control.

"The important thing is that there is confidence that inflation will come back to target," he said.

((uk.economics@reuters.com))

Keywords: BRITAIN BOE/SENTANCE

(adds quotes, detail)

LONDON, May 23 (Reuters) - Britain's economy looks set for a "significant slowdown" and might even tip into recession, Bank of England policymaker Andrew Sentance said.

Sentance, who is one of the most hawkish members of the bank's Monetary Policy Committee, said it was still difficult to say how hard the credit crunch would hit the real economy.

He told Warwick University's student radio station that a recession was not the most likely outcome but could not be dismissed.

"You can't totally rule that out because we are vulnerable to shocks from the external economy, and we are dealing with some things, pressures from the financial markets, that are very difficult to calibrate and to understand at the moment," Sentance said.

"Our best assessment is that the forecast is not for recession, but what we do expect to see is quite a significant slowdown in growth."

Sentance, who opposed the majority decision to cut interest rates last month, said it was important that the public trusted the central bank would act to keep inflation under control.

"The important thing is that there is confidence that inflation will come back to target," he said.

He took comfort from subdued wage pressures which he said suggested workers expected the recent rise in inflation to be temporary.

Consumer price inflation in Britain is at 3.0 percent year-on-year and has been above the central bank's 2 percent target since last October.

In an interview with the Wolverhampton Express & Star, Sentance said a tour of the West Midlands had brought home the impact on businesses of rising input costs.

"One thing that has struck me on this visit is the extent to which companies -- particularly in manufacturing where they use a lot of raw materials and energy -- are facing very significant cost pressures," Sentance said.

The comments were published on the newspaper's Web site on Friday, a day after oil prices stormed to a new record high above $135 per barrel.

(Reporting by Matt Falloon and Christina Fincher; editing by David Stamp)

((uk.economics@reuters.com, +44 207 542 7708))

Keywords: BRITAIN BOE/SENTANCE

UPDATE 1-UK set for "significant slowdown" -BoE's Sentance

Reuters: [2008-05-23 15:15:00]

(adds quotes, detail)

LONDON, May 23 (Reuters) - Britain's economy looks set for a "significant slowdown" and might even tip into recession, Bank of England policymaker Andrew Sentance said.

Sentance, who is one of the most hawkish members of the bank's Monetary Policy Committee, said it was still difficult to say how hard the credit crunch would hit the real economy.

He told Warwick University's student radio station that a recession was not the most likely outcome but could not be dismissed.

"You can't totally rule that out because we are vulnerable to shocks from the external economy, and we are dealing with some things, pressures from the financial markets, that are very difficult to calibrate and to understand at the moment," Sentance said.

"Our best assessment is that the forecast is not for recession, but what we do expect to see is quite a significant slowdown in growth."

Sentance, who opposed the majority decision to cut interest rates last month, said it was important that the public trusted the central bank would act to keep inflation under control.

"The important thing is that there is confidence that inflation will come back to target," he said.

He took comfort from subdued wage pressures which he said suggested workers expected the recent rise in inflation to be temporary.

Consumer price inflation in Britain is at 3.0 percent year-on-year and has been above the central bank's 2 percent target since last October.

In an interview with the Wolverhampton Express & Star, Sentance said a tour of the West Midlands had brought home the impact on businesses of rising input costs.

"One thing that has struck me on this visit is the extent to which companies -- particularly in manufacturing where they use a lot of raw materials and energy -- are facing very significant cost pressures," Sentance said.

The comments were published on the newspaper's Web site on Friday, a day after oil prices stormed to a new record high above $135 per barrel.

(Reporting by Matt Falloon and Christina Fincher; editing by David Stamp)

((uk.economics@reuters.com, +44 207 542 7708))

Keywords: BRITAIN BOE/SENTANCE

BoE's Sentance-UK firms face "very significant" costs

Reuters: [2008-05-23 14:27:00]

LONDON, May 23 (Reuters) - British companies are having to contend with soaring cost pressures, particularly in manufacturing, Bank of England policymaker Andrew Sentance said in an interview with a regional newspaper published on Friday.

"One thing that has struck me on this visit is the extent to which companies -- particularly in manufacturing where they use a lot of raw materials and energy -- are facing very significant cost pressures," Sentance told the Wolverhampton Express & Star.

The comments were published on the newspaper's Web site.

(Reporting by Matt Falloon, editing by Christina Fincher)

((UK Economics desk, uk.economics@reuters.com))

Keywords: BRITAIN SENTANCE/COSTS

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