Belfast Telegraph

Home Business Brexit

Brexit: Interest rates cut expected today

By Holly Williams

The economy is set for a post-Brexit vote boost, amid mounting expectation the Bank of England will cut interest rates for the first time in more than seven years.

Bank governor Mark Carney has already signalled that policymakers on the Monetary Policy Committee (MPC) would vote to slash rates over July or August to shore up the economy.

Economists at Hargreaves Lansdown said it was "now probable" rates will be cut today with financial markets pricing in a reduction from 0.5% to 0.25%.

They said it was possible rates may be lowered further to zero in August, while the Bank is also expected to pump cash into the economy to bolster flagging growth and contain the fallout of the Brexit vote. It would bring interest rates down to a new historic low and mark the first change since March 2009, when the Bank slashed rates to the all-time emergency low of 0.5% at the height of the financial crisis.

A rate cut would be good news for borrowers, but spell further misery for long-suffering savers.

Ben Brettell, senior economist at Hargreaves Lansdown, said: "Initially August had looked more likely, but with economic data deteriorating and markets still nervous, it now looks probable the MPC will adjudge that immediate action is warranted."

Recent signs for growth have been worrying, with industry surveys for the services sector and the construction industry pointing to a sharp slowdown, with the latter experiencing its worst month in seven years.

Mr Carney also said on unveiling the Bank's Financial Stability Report that Brexit risks to the economy had started to "crystallise". The pound tumbled to fresh 31-year lows last week on the economic gloom, although it has since recovered some of the ground lost.

Belfast Telegraph