What will happen at the next MPC meeting?
As we approach the next meeting of the Bank of England Monetary Policy Committee (5th March) there is a general consensus that interest rates will be reduced but there is some debate as to whether this will have any impact on the economy. The vast majority of economists expect a 0.5% reduction in UK base rates which would take them down to 0.5% although there are strong suspicions that the event will be used to launch what is commonly known as quantitative easing.
In many ways the age-old weapon of interest rate reductions has lost its power over the last few months after initially appearing to have a short-term impact. The UK consumer is now being over-run with downbeat financial forecasts which appear to indicate the UK economy is on the verge of a doomsday scenario. This has in many ways overshadowed what would in the past have been headline grabbing news with interest rates falling to 1% although in the current climate this is having a negligible impact.
It will be interesting to see how the UK authorities tackle the ongoing pessimism which has swamped the UK economy and how they will attempt to change the mindset of consumers and investors in the UK.
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