Trump Officially Impeached | BOE, BOJ Keep Rates Unchanged
Published December 19, 2019
The Democratic-led House of Congress voted on Wednesday to impeach President Donald Trump and formally charge him with abuse of power and obstruction of Congress. The charges set up a January trial in the Republican-held Senate, where it would require a two-thirds majority vote to convict the president and remove him from office. Markets continue to shrug off the headlines and remain calm since the odds of a Senate conviction, which would require the support of at least 20 Republican senators, are low at this point. Senate Majority Leader Mitch McConnell has confirmed the unlikelihood yesterday after telling reporters there is “no chance” his chamber will remove Trump from office.
The Bank of Japan has kept its negative interest rates unchanged after Governor Haruhiko Kuroda warned that the risks to Japan’s economic recovery remain high, even with the US-China phase one deal slightly improving the global economic outlook. Kuroda also acknowledged there is a limit to how much the BOJ could depress interest rates since extended periods of negative borrowing costs could damage the nation’s financial institutions. The yen hasn’t moved much after the decision, as markets project the BOJ will remain on the sidelines in 2020 barring a significant deterioration in the global economy.
The Bank of England also kept rates unchanged, although two of the nine committee members voted for a 25-basis point cut in rates. The BOE is taking a patient approach after the Conservative party’s landslide election victory earlier this month and will want to see how the Brexit process impacts the economy before making any policy changes. The pound is unchanged on the headlines since the rate decision and subsequent policy statement were largely in line with market expectations.