Interest rate cut expected Thursday

If it happens the first reduction of interest rates in seven years will affect the housing market, banks, savers and those trading currency.

It is widely expected that the Bank of England will cut interest rates on Thursday, for the first time since March 2009, as volatility continues to plague financial markets following the EU referendum.

Despite markets projecting a cut following last month’s Monetary Policy Committee meeting its members resisted cutting the base rate as it awaited more detailed data following the Brexit vote.

However the central bank is now expected to cut rates in light of both the latest inflation report and growth forecasts which will also be published Thursday whilst lowering the UK growth forecast by the biggest margin on record.

Back in May the BoE predicted that the economy would grow by 2.3% this year however economists now fear that this could be lowered to less than 1%.

And Andy Haldane, the BoE’s chief economist and MPC member, has said the Bank could do more than cut rates in August as it looks to shore up the economy (more here).

Meanwhile fellow MPC Martin Weale has said he was not convinced that rates needed to be cut further to stabilise the economy following the EU referendum (more here).

A Reuters poll last week found that all but three of 49 economists surveyed expect a cut to 0.25%.

If interest rates are cut it will be the first time they have changed since March 2009.

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Written by: Houseladder