Bank base rate cut possible?

by Property 118

11:45 AM, 9th May 2016
About 3 years ago

Bank base rate cut possible?

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Bank base rate cut possible?

Bank of EnglandAmid what looks likely to be slowing growth figures for April, the Bank of England is predicted in the inflation report due this week to produce its most detailed analysis on the risks of Brexit and the continued uncertainty that this is causing in the economy.

The economy looks like slowing quickly before the June referendum and the Sunday Times reported that the Bank of England have been asking banks to prepare for a possible rate cut.

This has apparently been confirmed by an unnamed CEO telling the newspaper that after a call to the Bank of England office he was asked to investigate if his bank’s balance sheet could handle a cut in interest rates.

Mark Carney, the Governor of the Bank of England, has previously said to the Treasury Select Committee that the potential of leaving the EU would be considered as the greatest domestic economic threat posed to financial stability in the short and medium term.

 



Comments

Michael Holmes

15:59 PM, 9th May 2016
About 3 years ago

Mark Carney has a bee in his bonnet about the mortgage market, notably buy-to-let, which he is busy making uneconomic to consider in a balanced retirement portfolio. As for a drop in interest rates, I can't see how he is going to manage that, since it is only half a percent now. Zero bank rate makes investing in your under the mattress cash pile look positively benign and as for gold, well, pile in, it is cast iron (if you will pardon the pun) one-way winning bet!

Romain Garcin

16:55 PM, 9th May 2016
About 3 years ago

I think the BoE would be in a tight place in case of Brexit.

Rates are already (almost) as low as possible, so there is little room to lower them in order to prop up the economy.

On the other hand, a negative consequence of Brexit that I often read about is that the Pound would lose value.
Whilst this could boost exports it would also likely cause inflation to rise, and thus might put pressure on the BoE to raise rates...


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