Fears that the Bank of England could raise interest rates in response to the pound falling in order to bring inflation under control
There have been fears that the Bank of England could raise interest rates in response to the pound falling in order to bring inflation under control.
The Bank has said that it will take “all steps necessary” to ensure financial stability as a result of the decision.
Bank of England governor, Mark Carney, said: “The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward.”
Many leading economists have forecast that the Bank could potentially cut interest rates in order to support the UK economy.
Calum Bennie, savings expert at Scottish Friendly, said: “Today sterling has plummeted and if it later needs to be propped up by increases in interest rates, this could result in higher mortgage costs.
“On the other hand, if the economy falters, the Bank of England could leave interest rates at their current all-time low or reduce them further to try and stimulate the economy. Holidaymakers will certainly be hit over the next few weeks with the higher cost of buying currency.”
Richard Adams, managing director of mortgage and protection network Stonebridge Group, said: “The uncertainty this vote to leave the EU delivers will undoubtedly affect the mortgage market. There are likely to be significant ramifications in terms of demand for purchasing property, and therefore securing a mortgage, at a time when demand has already dropped off.
“This will be further exacerbated depending on how the financial markets react, how lenders in turn react and in particular what might happen to rates in the future.”