The non-Brexit bits from the Bank of England and the International Monetary Fund
You may have noticed, there have been some pretty stark warnings about what Brexit could do to the UK economy this week.
Cue outrage from Leave campaigners. But not just any Leave campaigners – a cabinet minister attacking George Osborne and a former chancellor questioning the independence of the governor of the Bank of England.
If it was not for all Brexit bluster, however, there would have been more than enough nuggets to make the headlines. Here's what you might have missed.
Mark to markets: You're wrong
The Bank of England reminded financial markets that they are wrong to think interest rates are going to be glued to the floor forevermore.
Futures markets indicate that the first rate hike – from 0.5 per cent to 0.75 per cent – has not been fully priced in until the second quarter of 2019. However, the Bank's latest forecasts have inflation surpassing its two per cent target a year earlier – summer 2018.
Since the inflation forecasts use market expectations of interest rates in its model, what this basically means is that if rates do what the market thinks they are going to do, then the Bank will miss its target.
In short, the Bank is telling the markets they are wrong.
Christine to George: Deficits gonna getcha
Christine Lagarde also told George Osborne that the UK economy isn't looking so pretty.
Growth is likely to fall below two per cent this year, she said – even if Britain votes to stay in the EU. The IMF said the UK economy was "subject to notable risks", these included a "low household saving rate; still-high levels of household debt and fiscal deficits … a wide current account deficit; and risks that productivity growth may remain low for an extended period."
The current account deficit – at seven per cent of GDP – is the largest its ever been and has been raising some serious concerns in recent months. Add in the UK's fiscal deficit – still at more than £70bn a year – and the trade deficit – its widest for four years – and Osborne has some big dilemmas.
IMF: Tax it, spend it
While Lagarde said that deficit reduction was important over the medium-term, the Fund also wants Britain to bolster its spending on infrastructure projects.
"Efforts should continue to further strengthen the pro-growth and pro-stability aspects of consolidation. A top priority in this regard is to further boost infrastructure spending, as needs remain high."
So, where's the cash supposed to come from? This is where it gets a bit tricky.
Read more: Heathrow offers compromise to kick-start airport expansion
"Increases could be funded by measures such as scaling back distortionary tax expenditures e.g. nonstandard VAT rates," the IMF said.
Trying to tweak those "nonstandard VAT rates" has got George into a spot of bother in the past. Pasty tax, anyone?
Bank: Big bad world looking better
Out there, in the rest of the world, things seem a little perkier than they did a few months back, at least in the caverns of Threadneedle Street.
"Globally, sentiment in financial markets has improved," the MPC said.
There has been a broad-based recovery in risky asset prices, a resumption of capital flows to emerging market economies, and a sharp rise in the price of oil. Near-term prospects for China and other emerging market economies have improved a little.
– Bank of England's Monetary Policy Committee
Over the medium-term, a hard landing in China still poses the most immediate risk specifically to financial stability, according to the Bank.
But for now, at least, a revival over the last few months has cooled wider economic concerns.
Get the house in order
Once upon a time set-piece events like the Inflation Report were dominated by talk of the housing market – too fast or too slow, too tight or too loose. Fear not, it was still there this time round.
The Bank defended its recent changes to the buy to let market which will make it harder for landlords to get loans for rental property, and said that property activity was likely to grow at a slower pace than before the crisis. That's probably not too hard, mind.
It still thinks house prices are going to bounce up by more than six per cent a year, however.
The IMF was less impressed with the UK's ability to get the housing market under wraps:
If current housing and mortgage market trends persist, further macroprudential tightening (e.g., tighter loan-to-income or loan-to-value limits) will be needed later this year to avoid financial stability risks that may arise from excessive household indebtedness.
– International Monetary Fund
Brexit may be the biggest game in town right now. But it's not the only one.