Interest Rates Cut Due This Week?
The Bank of England looks certain to cut interest rates this week mainly due, it is said to uncertainty caused by the vote to leave the EU. If they are cut it will be the first rate reduction since they were set at 0.5% at the start of the current recession in March 2009.
The Bank’s Monetary Policy Committee haven’t reduced rates after the vote to leave the EU as yet despite warning that a vote to leave could trigger a recession (Editor’s note: I thought we were aready still in one! When did that one end?).
The Bank is also likely to predict (rather predictably actually) gloomy prospects for the British economy (again due to the EU referendum result of course). Before the referendum it was forcasting that the economy would grow by 2.3% this year, but it is widely believed that this could now be slashed to less than 1%.
It is also thought possible that because of all the gloomyness and pessimism around following the vote that the bank might also try to boost the climate by announcing a programme of printing money and lending schemes.
A Reuters poll of 49 economists last week resulted in all but 3 saying that they exected the bank to lower interest rates following the EU referendum rather than raising them which was the expected move in the event of a remain vote.