Investment Clock insights

Bank of England could cut rates again this year

Ian Kernohan 

7 September 2016

Mr Carney appeared very comfortable with the actions the Bank of England took last month as he appeared at the select committee today. The Monetary Policy Committee (MPC) had already cast doubt on the large fall in the July Purchasing Managers' Indices (PMIs), so the bounce back in August should not have surprised them. 

An average of the monthly PMIs, together with official data such as today’s Industrial Production data, suggests that third quarter GDP growth has slowed sharply, even if the economy hasn’t gone into a contraction as previously feared. 

The Bank’s central view is that the 'Brexit' process will take some time, and this will create uncertainty for households and firms.  The MPC have already signalled that they expect to cut interest rates again, if economic news meets their expectations for August.  In our view, the news since the August Inflation Report should not have created any major surprises for them, and we expect another rate cut from the Bank of England in November.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.