Interest Rates To Be Cut Next Week

Interest Rates To Be Cut Next Week.

The Bank of England Monetary Policy Committee (MPC) is set to meet again next week on 14 July.

Many commentators are suggesting that immediate action will be taken find the MPC and interest rates will be cut next week. This forms part of planned economic stimulus by the Bank of England following the Brexit vote.

Some are suggesting an initial cut of 0.25%, taking rates down overall to 0.25%. We believe over the coming few years the UK could even enter 0% and even negative interest rates when banks are charged to leave their money with the Bank of England.

Add to this, an additional £250 billion of quantitative easing has already been announced and we suggest there could be further quantitative easing, when combined with potential corporation tax rate cuts, the ‘people in power’ are certainly looking to underpin the UK economy.

That said, we believe this will devalue sterling even further which is good for exports i.e. the costs of British goods and services overseas being cheaper but it will make imports (including raw materials) as well as food and other goods more expensive. We believe we are back to "boom/bust" economics and we are planning for initially a recession for around five years and then a sustained period of inflation as prices rise and continue to rise with a weak pound. High inflation ultimately leads to higher interest rates as we saw in the 1980s.