It could hardly be a shock to anyone today that the Bank of England chose to keep interest rates at 0.75%. With Boris Johnson little more than two weeks into his role as PM, a fresh Cabinet settling in and fears of a ‘no-deal’ Brexit, the Monetary Policy Committee (MPC) had little else in the way of options.
The Bank’s Chief Economist Andy Haldene has been quoted as saying he would be “very cautious” about cutting rates unless there was a severe downturn, as there’s a risk it could fuel inflation rather than growth.
Although BoE Governor Mark Carney has repeatedly spoken about his long term strategy of slow and steady rises, protracted Brexit negotiations have effectively tied his hands from progressing with his plans. In fact, NatWest’s Co-Head of Global Economics, Ross Walker believes that the BoE will end up having to cut rates twice next year.
Just yesterday, the Federal Reserve lowered US rates by 0.25% and last week the European Central Bank held interest rates steady. Financial futures markets – taken at face value – point to an 80% chance that the BoE will lower the rate by 0.25% to 0.5% by the end of January and before Carney steps down from his role. We will watch with interest who the new Chancellor – Savid Javid – chooses as his successor.
If you have any queries about how interest rates might affect you, please get in touch with our team of expert advisers here at largemortgageloans.com.
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