At the latest Bank of England Monetary Policy Committee meeting it was unanimously agreed that interest rates would remain at 0.5%. This was entirely expected with a number of factors being considered such as global economic conditions, low UK inflation and the uncertainty of Brexit given the upcoming referendum.
Indeed potential UK exit from the EU was a big talking point at the recent meeting but the Bank of England have made it clear they are prepared for any eventuality and hope to continue economic stability.
One school of thought if we leave the EU is that the Bank could reduce interest rates further, this would be a post-crash first. Indeed out of 26 economists Reuters asked on the topic 17 said a reduction could occur. Despite this Mark Carney ruled out the introduction of negative interest rates.
The International Monetary Fund recently warned about the potential fallout of a Brexit, and downgraded their forecasts for UK economic growth in Protected content , from 2.2% (as forecast in January) to 1.9%.
The IMF’s chief economist, Maurice Obstfeld, said: “In the United Kingdom, the planned June referendum on European Union membership has already created uncertainty for investors; a Brexit could do severe regional and global damage by disrupting established trading relationships.”
The aim of this post is to keep you abreast of the economic uncertainty we continue to face, these low interest rates are seeing people take riskier investments in the likes of property rather than save. It is incredibly difficult for people to make financial decisions in this current economic climate, especially those in financial difficulty.