Would you cut interest rates – and why?
Tomorrow is the Big Day – when the Bank of England’s Monetary Policy Committee (MPC) decides whether or not to cut interest rates.
Rates have remained at their historic low of 0.5% since 2009. Governor Mark Carney hinted in June that the Bank would cut rates to help counter any downturn following the Brexit vote.
However, the Bank defied market expectations of a reduction in its first post-Brexit rate decision in July, perhaps with some justification amid the economic and political volatility of the time.
Many analysts are now forecasting a 0.25% cut – down to 0.25% – tomorrow when the Bank will also publish its quarterly inflation report.
The Bank’s chief economist Andy Haldane has also suggested that it could be time to ‘use a sledgehammer to crack a nut’ which may indicate further measures, such as more quantitative easing.
Governor Carney has kept a fairly steady hand on the tiller through choppy waters over the past few years.
Hopefully, any decision by the MPC will be a balanced, measured and appropriate one at a time when confidence in the economy and UK PLC as a whole is crucial.
Lower interest rates may be welcomed by first time buyers and elements of the property market although they make not make a material difference in some quarters.
As a leading South Coast firm of chartered surveyors and provider of professional property related services, we are still seeing strong demand – especially for our wide range of surveys and Homebuyer reports – and we expect this to continue over the second half of 2016.
We’ll be watching carefully to see what the decision is tomorrow and also the commentary from the Bank that accompanies it.
As a firm, we always keep informed of industry developments to ensure we can deliver the best customer service and professional advice for our many clients.
The decision will no doubt be on the news but you can also visit the Bank’s website at www.bankofengland.co.uk/Pages/home.aspx
There’s also an interesting blog from Torsten Bell at the Resolution Foundation – which yesterday revealed that house ownership had fallen to its lowest since 2000 – at www.resolutionfoundation.org/media/blog/the-bank-will-bring-out-its-sledgehammer-this-week-but-it-needs-to-explain-which-nut-its-trying-to-crack/
He makes a fair point that greater focus needs to be on policy makers amongst our elected representatives at Westminster rather than the Bank with trade policy, industrial strategy and public investment the issues that really matter.
There’s also a good précis on the This is Money website at www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html
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Tomorrow is the Big Day – when the Bank of England’s Monetary Policy Committee (MPC) decides whether or not to…