Get Adobe Flash player

Bank of England’s wary outlook dampens the prospect of a swift cycle of rate rises

about 7 hours ago

Eoin Burke-Kennedy

Bank of England governor Mark Carney. His suggestion that further rate rises would only be “gradual and limited” has been interpreted as meaning perhaps only one more rise in 2018, and ultimately a negative for sterling. Photograph: Getty Images




You might be wondering why the Bank of England’s first interest rate rise in a decade has triggered a slump in sterling, heaping further pressure on exporters in Ireland.

Conventional economic wisdom tells us that raising rates should strengthen the value of a country’s currency rather than weaken it, with investors lured in to avail of higher rates of return.

In the new era of forward guidance, however, the Bank of England’s decision had been telegraphed in advance, and digested as a fait accompli by currency traders. Hence the focus has been the central bank’s outlook and specifically whether Thursday’s rate change signals the start of a cycle of rate rises or what analysts are calling a “one-and-done rate increase”.

Bank of England governor Mark Carney’s suggestion that further rate hikes would only be “gradual and limited” has been interpreted as meaning perhaps only one more rise in 2018, not what the currency hawks were hoping for and ultimately a negative for sterling.

Within minutes of the Bank of England’s decision, the UK currency was trading down 1.3 per cent against the euro and down 1 per cent against the dollar.

The reason for the central bank’s wary approach relates to Brexit and the political and economic uncertainty hanging over the UK.

Mr Carney said Britain’s exit from the EU was the biggest factor determining the country’s long-term economic prospects, noting it had already pushed up prices and weighed on growth.


He also said that Brexit had exacerbated Britain’s long-standing productivity problems by deterring businesses from making new investments, a factor which is likely to frustrate Chancellor Philip Hammond’s budgetary plans.

With UK inflation at 3 per cent – a five-year high – basic economic theory calls for a rate hike to anchor the upward momentum in prices. Yet withdrawing monetary stimulus too sharply risks compounding the current weakness in consumption and investment, which have been dampened by Brexit.

Also, the pick-up in inflation is largely down to temporary factors – the slump in sterling. Wages and underlying prices are not increasing that much, all of which makes the interest rate call a tricky issue.

Nonetheless the majority of Bank of England policy-makers who voted for the rise felt they could no longer tolerate above-target inflation despite the Brexit uncertainty.

World Economic Forum cites reduction in number of female Ministers

about 8 hours ago

Colin Gleeson

On current trends, the overall global gender gap can be closed in exactly 100 years across the 106 countries covered since the inception of the report.




The Republic’s progress on closing the gender gap has continued to stall following declines in health, survival, and the number of women in ministerial positions, according to the World Economic Forum (WEF).

The Global Gender Gap Report benchmarks progress towards gender parity across four themes: economic participation and opportunity; educational attainment; health and survival; and political empowerment.

The Republic was ranked eighth out of 144 states, slipping two places since last year when it dropped from fifth to sixth. However, the report found the State has closed 79 per cent of its overall gender gap.

It has however widened its health and survival gap, and decreased gender parity in terms of the number of women in ministerial positions. In all, six of the 34 Ministers in Taoiseach Leo Varadkar’s Government are female.

More positively, the State maintains a fully closed gender gap on educational attainment from last year, and also sees an increase in gender parity in the number of legislators, senior officials and managers, continuing a steady trend since 2013.

The Republic was ranked 50th for economic participation and opportunity, down a place since last year. On educational attainment, it maintained its joint first ranking.

Last year’s report lauded the Republic for “improvements” on political empowerment due to an increase in the number of women in parliament. However, the State has this year dropped a place from fifth to sixth following the reduction in female ministers.

The health and survival category saw the starkest drop, with the Republic plummeting from 54th to 96th. However, the drop can be attributed to the narrowness of the gap globally.

The State has closed 97 per cent of its health gender gap, which is above the global average. Nevertheless, 34 states have fully succeeded in closing the gap, and another 61 perform marginally better than Ireland in progress towards doing so.

Rwanda in Sub Saharan Africa is ranked four places above the Republic after it closed 80 per cent of its gender gap in last year’s report to break into the top five for the first time.

That was mostly due to improvements on its economic participation and opportunity score, where it moved up six places on the back of improved parity in income. It remains the state with the highest share of female parliamentarians in the world (61 per cent).

Overall, the average progress on closing the global gender gap stands at 68 per cent – meaning an average gap of 32 per cent remains to be closed worldwide, compared to an average gap of 31.7 per cent last year.

On average, the 144 states covered in the report have closed 96 per cent of the gap in health outcomes between women and men, unchanged since last year, and more than 95 per cent of the gap in educational attainment, a slight decrease on last year.

However, the gaps between women and men on economic participation and political empowerment remain wide. Only 58 per cent of the economic participation gap has been closed, which was a second consecutive year of reversed progress and the lowest value measured by the Index since 2008.

About 23 per cent of the political gap has been closed, which is unchanged since last year against a long-term trend of slow but steady improvement.

This year’s report sees no new entrants to the top 10, which is dominated by smaller Western European countries, and particularly the Nordics with Iceland, Finland, and Norway occupying the top three positions.

On current trends, the overall global gender gap can be closed in exactly 100 years across the 106 countries covered since the inception of the report, compared to 83 years last year.

The most challenging gender gaps remain in the economic and health spheres. Given the continued widening of the economic gender gap, it will now not be closed for another 217 years. The health gender gap is larger than it stood in 2006.

However, the education–specific gender gap could be reduced to parity within the next 13 years. The political dimension holds the widest gap but is also exhibiting the most progress, despite a slowdown this year. It could be closed within 99 years.

Move is ‘nimble response’ to unpredictable situation prompted by Brexit, says Carney

about 11 hours ago
Updated: about 10 hours ago

Bank of England governor Mark Carney at a press conference following its decision to raise interest rates to 0.5%. Photograph: Stefan Rousseau / PA

All eyes – and browsers – were on the Bank of England site ahead of its historic interest rate announcement.

Previous Image

Next Image




The Bank of England has increased interest rates for the first time since 2007, despite fears for the fragility of the UK economy as its 2019 departure from the European Union nears.

Policymakers on the bank’s Monetary Policy Committee (MPC) opted to increase interest rates to 0.5 per cent, up a quarter of a point, by a majority of seven to two.

The bank will reassess the economic outlook once it has more visibility on the nature of the UK’s new relationship with the EU after Brexit, and the form that any transition period will take, the bank’s governor Mark Carney said on Thursday.

“The impact of Brexit on the forecast will evolve as negotiations progress,” Mr Carney said.

Asked at a press conference whether the rate move might ultimately be viewed as a mistake, Mr Carney said that it was better to think of it as a “nimble response” to an unpredictable set of circumstances.

Once the “big issues” around Brexit have been clarified, policymakers must “step back and assess the new outlook and calibrate policy appropriately”, he said.

Inflation in the UK economy is at 3 per cent, above the bank’s target of 2 per cent, due to the fall in the pound following the Brexit vote.

“A majority of members judged that a small reduction in stimulus was therefore warranted at this meeting to return inflation sustainably to target,” the MPC said.

“Monetary policy would continue to provide significant support to jobs and activity in the current exceptional circumstances.”

However, the UK’s monetary policy path is complicated by the fact upward price pressures aren’t stemming from stronger demand, but flaws in the economy aggravated by Brexit, namely weak productivity.

Annual growth is running at its weakest in four years and the decision to increase rates was taken despite economic growth appearing weaker than before any other increase in borrowing costs in the past 20 years.

Limited and gradual

The bank kept its forecasts for growth and inflation broadly unchanged and sees price gains at 2.2 in three years, slightly above its 2 per cent target. It also reiterated that any future interest-rate increases will be “limited” and “gradual”.

That was followed by a gloomy section in its statement that there are “considerable risks” to the outlook. Brexit featured prominently in the warning, with policy makers saying they’re ready to respond if it affects households, businesses and inflation.

An error message was posted on the UK central bank’s site ahead of the announcement, telling visitors that it was “experiencing a high volume of traffic” and referring users to its Twitter feed for the latest inflation report.

Sterling edged down ahead of the move on Thursday after making gains earlier this week. The dovish language at Mr Carney’s press conference sent the pound slumping 1 per cent to around $1.31.

(Additional reporting: Bloomberg / Reuters)

Terence O’Donnell was named as a ‘distinguished contributor’ to the field

about 15 hours ago

Peter Hamilton

Pictured with Derek Tierney (centre), Department of Finance, is president, Ireland Chapter of PMI, Niall Murphy (left) and PwC Director for Portfolio and Programme Management in Ireland, Darren D’Arcy. Photograph: Maxwells




The Ireland chapter of the Project Management Institute (PMI) has named Terence O’Donnell as its distinguished contributor to project management in 2017 for his “career achievements” across the education and consulting successes in the field.

At the inaugural project awards Sonalake won SME project of the year for its work on the automation of fibre services while Three Ireland won the award for ‘project management for social good’ for its charity partner e-mentoring system. The project professional of the year was named as Derek Tierney from the Department of Finance.

Public sector project of the year went to Irish water parent Ervia for its Limerick gasworks remediation project while the Royal College of Surgeons won private sector project of the year for their national training programme for emergency medicine. Project management office of the year went to Prudential Financial subsidiary, Pramerica.

“The National Project Awards celebrate the very best of project management across the country. The calibre of entries for our inaugural awards was excellent and reinforces the extraordinary talent there is within the industry,” said Niall Murphy, president of the PMI Ireland chapter.

Darren D’Arcy, PwC director for portfolio and programme management in Ireland said: “The calibre of the National Project Awards winners is a testament to the excellence within the project management discipline. Excellent project management skills result in more successful projects, reduce complexity, take out risk, improve outcomes and are critical to maintaining Ireland’s competitiveness.”

Across Ireland there are over 50,000 people employed in project management with membership of the PMI Ireland chapter up to over 1,300 members.

Remarkable growth since crash is no guarantee of a smooth, shock-free future

about 17 hours ago

One of many threats to the Irish economy would be an increase in oil prices




That the Irish economy is more exposed than most to what economists call external shocks is little surprise. At a time of significant uncertainty, the latest research paper from the Central Bank is welcome not only because it tries to put some estimates on our exposure, but also because it shows the range of factors which influence growth here.

We have tended to focus on Brexit when assessing the international risks facing the economy – and this is appropriate – but there are other threats, too, particularly as Irish trade and financial links grow across the world. For example a rise in US interest rates would have a significant impact here and so, to a lesser extent, would an increase in oil prices. In a sobering conclusion, the research does find that, for all shocks it examines, Ireland is consistently more exposed than other countries.

One of the most notable risks to Ireland is a drop in UK growth due to Brexit. The research finds a negative shock taking 1 per cent off the UK growth rate would cause a “significant and permanent decline in Irish output growth”.

Growth would fall here by close to 0.5 per cent as a result over the next decade, it estimates. One of the notable features of the research is the long-lasting impact on growth here of such “shocks”, whether from the UK, from newer trading partners such as China or from a general fall-off in world economic performance.

Of course policy here cannot be drawn up on the basis of shocks which, by their nature, are unpredictable. But nor is it clever to ignore them, particularly when – like Brexit – the risk, if not its magnitude, is clear. The economy has bounced back remarkably after the years of the crash and, even allowing for the oddness of Irish statistics, growth here has been encouraging – and remarkable.

But we have been operating in a benign environment with low interest rates and reasonable international growth. It is best to realise, in an uncertain world, that, as the old investment saying goes, “past performance is no guarantee of future results”.

Rapid turnaround in labour market may not be enough for certain jobless categories

about 17 hours ago

Dole queue outside Bishop Street in Dublin back in 2010. Unemployment has dropped from 15.2 per cent in January 2012 to just 6 per cent last month, its lowest rate in nine years. Photograph: Aidan Crawley




Another month, another fall in the State’s headline rate of unemployment. The almost unbroken sequence of employment growth since 2012 represents one of the swiftest turnarounds in contemporary economic history.

It has seen unemployment drop from a post-crash high of 15.2 per cent in January 2012 to just 6 per cent last month, its lowest rate in nine years.

While the initial decline was aided by emigration, the more recent drop has coincided with a period of net inward migration, and is indisputably linked to the ongoing pick-up in domestic conditions.

Long-term joblessness is perhaps one of the biggest risk factors in any post-crash economy, however. It lingered long after the economic crash of the late 1980s, even when a rapid expansion in exports earned Ireland the moniker of Celtic Tiger.

During the boom years, the long-term unemployment rate – the percentage of the total workforce out of work for more than a year as measured by the Quarterly National Household Survey – fell to a record low of 1.3 per cent.

Long-term claimants

However, when the economy fell headlong into the financial crisis after 2008, long-term joblessness rose sharply. As unemployment peaked in 2012, long-term unemployment reached its highest level of 9.5 per cent. At the time, more than 200,000 people were classified as long-term claimants – some 30 per cent were former construction workers.

The latest Quarterly National Household Survey for the second quarter of 2017 put the long-term unemployment rate at 3.1 per cent, which corresponds to 68,900 workers.

This represents a significant improvement and contrasts with what happened previously in the 1990s when it remained elevated for several years after the economy had shifted gear.

Nonetheless, 68,900 workers represent a sizeable part of the labour market and it’s unlikely they’ll be filling roles in financial services and IT, where most of the demand is. Placing these people, many of whom are not young, back into meaningful employment may require more sophisticated reskilling programmes. Programmes we haven’t adopted to date.

Central bank points to strengthening labour market and rising economic activity

about 4 hours ago

Federal Reserve chairwoman Janet Yellen speaks during a news conference after a two-day Federal Open Markets Committee policy meeting in Washington. Photograph: Joshua Roberts/Reuters




US Federal Reserve officials voted unanimously to leave interest rates unchanged while signalling they remain on track to hike once more this year, a day before President Donald Trump plans to unveil his choice to lead the US central bank.

Recent data indicate that “the labour market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington.

Officials gave no sign that their expectations for a third interest-rate increase this year have been derailed. The Fed repeated its assessment that, while inflation may “remain somewhat below 2 per cent in the near term,” it’s expected to stabilise around the central bank’s 2 per cent objective “over the medium term”.

The statement is likely to reinforce expectations for a December hike. All four rate hikes since late 2015 have come at gatherings that were accompanied by a press conference, which occur at alternating meetings. – Bloomberg