Interest rates on hold after cut gossip

14 July 2016
Interest rates on hold

This morning, it looked like the Bank of England could have made the first cut to UK interest rates.

There were rumours that the BoE were to relax rules which would allow banks to lend an additional £150 billion.

Interest rates have been the same since they were cut to 0.5% in March 2009, which was the business end of the financial crisis. By the end of summer, we could even see rates cut to zero.

Either way, the interest rate cut is off for the time being.

The Monetary Policy Committee (MPC) has decided that, post Brexit vote, the country needs to show a little patience while everything is weighed up.

BoE governor, Mark Carney, had originally said "some monetary policy easing will likely be required over the summer", which is still true as summer is not over yet.

It looks like we're waiting until August to see what happens.

As we stand, something is going to have to be done. The slowdown in economic growth could send the UK in a recession, which many economists predicted before the EU Referendum vote.

There's also a chance of an increase in inflation, thanks to the drop in the value of sterling.

So, for now, the country is sticking rather than twisting, but something is going to happen in the coming weeks.

TOPICS:   Economy

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