Bank of England
Bank of England
Paul Zinchenko

Paul Zinchenko

Paul is an online news editor. He he has written extensively about education, parenting, sustainability, and politics.
Paul Zinchenko

The Bank of England will hold interest rates at 0.5 per cent, it has been announced, surprising economics and traders who expected that rates would be cut to support the economy post-Brexit.

At its first meeting since the EU referendum, the Bank of England’s monetary policy committee (MPC) voted eight to one to keep the historically low rate that has been in place since 2009.

The Bank of England However, has warned that rates are likely to be cut in August, as the committee’s initial assessment suggests that the vote has affected business and consumer confidence negatively, with suggestions that some businesses are delaying investment and that activity in the housing sector is about to decline.

Commenting on the Bank of England’s decision to keep interest rates at 0.5%, Howard Graham, CEO of start-up specialist Made Simple Group, said:

“Mark Carney will have his motives for keeping interest rates as they are for the time being, but a cut is inevitable. When this happens, it will be welcome news for small businesses and start-ups, who will benefit from cheaper borrowing – vital when you consider that sourcing finance is one of the first hurdles when setting up a new company.

Related:  Holly Mackay: What does the Bank of England interest rate cut mean for you?

“Small enterprises, especially those employing just nine people or less, are vital to our economy, accounting for 95% of total UK business and a third of the sector’s employment, and yet barriers like funding can act as a deterrent for those just starting out. For these companies, the ability to borrow at a lower rate could make a huge difference to their prospects over the next few months. In turn, this could be a shot in the arm for the economy.”

Essentially, the bank has behaved cautiously, preferring to wait until more economic data is available before making any major monetary shifts.

The Bank of England governor, Mark Carney, has repeatedly expressed willingness to deploy all the tools at his disposal to ameliorate the effects of Brexit, including loosening monetary policy.

 

Leave a Reply