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60 seconds with Azad Zangana on the BoE rate cut

The latest measures from the Bank of England (BoE) are likely to be helpful, but no panacea.

04/08/2016

Azad Zangana

Azad Zangana

Senior European Economist and Strategist

The BoE has decided to cut interest rates, restart quantitative easing, and introduce some additional funding to help corporates, all in reaction to the negative news surrounding activity in the manufacturing and services sectors.

The BoE has decided to take action as it looks like the economy is at a high risk of going into recession.

What does it mean for households?

We should see a fall in mortgage rates in the coming months. Unfortunately, savers are going to be negatively impacted as those interest rates fall, but this is all designed to avoid a recession.

Does the BoE have much ammunition left?

That’s the big question. We think that the latest action is helpful, but it certainly wouldn’t cause a huge amount of stimulus; it’s not going to avoid a recession if we’re heading into one.

We’re not actually forecasting a recession, but we do think there’s going to be quite a severe slowdown in growth in the next couple of years.

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