Are UK base rates set to fall further?
Bank of England deputy governor Charles Bean has today fuelled speculation that UK base rates could fall at the next MPC meeting. In a speech to the National Farmers Union conference in Birmingham he indicated that because UK inflation is running below the target level of 2% there was a need to make cheaper credit available to support businesses across the country. This has also brought about a discussion regarding deflation which is a nightmare scenario for any government. So when can we expect the next announcement on UK base rates?
The next MPC meeting is scheduled for 5 March and while it would be extraordinary for base rates to be cut before then this has not been ruled out completely. Sterling continues to fall, after a short bounce over recent days, amid growing signs that the UK government and the Bank of England are "not interested" in supporting the currency. There was also speculation that the authorities are pushing sterling lower and lower because it will assist with exports out of the UK which will become cheaper for foreign buyers.
However, a weaker pound will make UK imports more expensive which could in due course affect the rate of inflation and push many UK households to the limit of their financial power.
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