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BoE set to make ‘knife edge’ rates decision

by LLB Reporter
29th Jan 20 1:33 pm

The Bank of England (BoE) are to deliver their verdict on Thursday on interest rates which some are saying will be a “knife edge” decision as speculation mounts a cut could be on the way.

Financial markets are saying there is a 60% chance of a cut from 0.75% to 0.5% however, economists are saying the tentative signs of the economy picking up, which might be enough to stay in the Banks hands, non the less it seems it will be a close call.

With growth rate and falling inflation, members of the Monetary Policy Committee (MPC) could join two of the nine members who have previously voted to lower rates to 0.5%.

James Smith, developed markets economist at ING said, “It’s a close call, but a recent post-election pick up in sentiment should be enough to see the Bank of England avoid cutting interest rates this month.”

Also, the EY Item Club believe rates will be held for the next 18 months, but stressed the MPC’s decision “looks to be on a knife edge and is very hard to call.”

Stefan Koopman, senior market economist at Rabobank said, “We have been flagging the risk of Bank of England rate cuts in 2020 since late-summer.

“In our view, global growth will remain sluggish and we don’t expect the uncertainties regarding the UK’s future possible trading relationships to abate anytime soon.”

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