Investors believe it’s 100% certain the Bank of England will cut rates at its next meeting.
UK interest rates are already at a record low 0.50% but they will sink to 0.25% at the next meeting according to UK interest rate futures.
Analysts also expect the BoE to Slash Growth Targets by Biggest Margin on Record.
Investors believe an interest rate cut is certain, with most analysts expecting rates to be trimmed to 0.25pc, from the current record low of 0.5pc.
Economists believe growth in 2017 will be slashed to less than 1pc, from 2.3pc in May.
A reduction of this magnitude would be the biggest cut to the Bank’s growth projections between consecutive Inflation Report forecasts since it became independent in 1997, surpassing the 0.9 percentage point downgrade in November 2008, after Lehman Brothers collapsed, according to HSBC.
Growth in 2016 is also expected to be trimmed to around 1.5pc, from 2pc in May.
In the same month, Mark Carney, Governor of the Bank, warned that a Brexit vote could push the UK into a technical recession – defined as two quarters of falling economic output.
Andrew Goodwin, lead economist at Oxford Economics, said: “We think the Bank might expect third- quarter growth to be negative, but the shock to then dissipate and the UK to escape a recession, as evidenced by the Lloyds survey where the initial knee-jerk reaction was quite bad, but when people became accustomed to it they realised that business was carrying on.”
A rate cut plus a possible boost to the Bank’s quantitative easing programme is expected after the Monetary Policy Committee said in July that “most” of its nine members expected that policy would be eased in August.
BoE Sure Thing
I would generally be inclined to take the other side of these “sure thing” setups but central banks do not like to disappoint market expectations.
Technical Recession
What’s with this technical recession nonsense. There is either a recession or there isn’t. Two consecutive quarters of negative growth are a sufficient but not necessary condition for a recession in the US.
In any country, two quarters of negative growth is proof of a recession.
Brexit will take the blame, but it’s pretty clear global growth was already cooling.
Spotlight on the British Pound
Despite the alleged certainty that the BoE will cut rates and speculation it will slash growth rates the most on record, the British Pound has stabilized.
A British Pound selloff may very well be over.
Mike “Mish” Shedlock
So what does that mean for the dollar versus the pound?
They too are getting ready for the first Goldman Sach’s queen in the United States. When coronations are coming, a plain ol’ recession becomes eligible to be called a “technical” recession. it adds to the ambiance.
When every country it’s rates. Below zero, what then?
Despite forecasts, US growth stinks. For the best estimate just pick 1.0%. This will be closer than any economic models.
The actual is likely negative. But those that report the numbers have a direct interest in making sure we don’t see that.
Negative interest rates are the new insanity. It can’t work but where is the end?
Negative interest rates are the new insanity. It can’t work but where is the end? Matt
What’s insane is any positive interest paying by monetary sovereigns or their central banks since that’s welfare proportional to account balance rather than need.
The most interest a monetary sovereign or its central bank should pay is 0% and those accounts should be limited to individual citizens up to, say, $250,000 US or equivalent.
And, of course, government-provided deposit insurance and all other privileges for the banks abolished too.
Sniff… sniff.. sniff, sniff, sniff. Do you smell another Brexit vote coming?
LOL! They’ll cut their interest rate by 0.25%! That’ll make the difference! Central banks are so lame.
Sounds great actually. Force the Royals into high forms of “metallurgy.” Melting down the Crown Jewels, selling off Royal Estates, pawning the Royal Rolls.
All while interest rates remain “at or near zero forever.”
To the Ounce Sterling Gentlemen!
Hear! Hear!…
By 50% man, and not a penny less .
See? I told ya. They need to manufacture another global econ crisis to preclude any possibility of a rate hike. Moreover, they’re talking rate cuts.
The PTB know that they can’t raise the rates in the midst of the massive debt bubble that will only grow bigger and bigger. It’s the last line of defense against a huge global meltdown. Of course, it’s only a temporary line of defense until Mr. Math becomes the final arbiter and brings down the house of cards.
These temporary Band-Aid fixes will only make the final meltdown of all meltdowns that much worse.
Most on this comment board can read the writing on the wall. That’s commendable. The most you can do now is prepare and protect your families. To hell with the rest of them. They’re lost causes. At times you have to walk over the pending casualties to save yourself.
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An interest rate cut is aimed at German auto manufacturers. The imminent recession, weak pound, and hesitant British consumers could deprive Volkswagen of its oxygen supply. Half of the U.K.’s 2.6 million annual new-car sales are built by German-owned companies and Germany exports about 810,000 passenger cars a year to Britain. VW is struggling to pay $15 billion reparations for fraud. If Brussels does not reinstate free trade with Britain then VW could sink along with Deutsche Bank and Merkel.
I think it’s time to ditch the ‘experts’ who have got it wrong time after time. The market will play games and try to make money on the ups and downs. The new PM has to take the market with a pinch of salt and not go with knee jerk reactions, The UK has had too many years of governing by public opinion; it is time for planning and reaching out to cement old partnerships and build and strengthen new ones.
You realize you are asking leaders to … actually lead ?
Forget about Free Market Capitalism. The Central Banks and governments will continue to manipulate economics until, inevitably, the fail will be a crash. We are well on the way already, the clueless just haven’t noticed because the manipulators and their Wall St. cronies have forced stock markets higher.
“Insiders” are dumping stocks, and it is a classic pump & dump of mammoth proportions.
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