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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/14/bank-of-england-interest-rates-cut-brexit-record-low-today-business-live
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| Bank of England to reveal interest rate cut decision – business live | Bank of England to reveal interest rate cut decision – business live |
| (35 minutes later) | |
| 11.55am BST | |
| 11:55 | |
| FIVE MINUTES TO GO...... | |
| Currently the pound is trading at $1.323 against the US dollar, up almost a cent today. | |
| And the FTSE 100 is up 62 points, or almost 1%, at 6732. | |
| 11.49am BST | |
| 11:49 | |
| The Bank of England faced a very tricky decision this month... weighing up the risks to economic growth against the prospect of higher inflation. | |
| Mark Carney and colleagues will also be aware that they can’t cut interest rates much lower -- although negative borrowing costs are an option. So a quarter-point cut to 0.25% would give leeway for further cuts in the future. | |
| Fawad Razaqzada, market analyst at Forex.com, explains how political developments will also have influenced the BoE: | |
| The Bank of England is widely expected to do something today, possibly deliver a 25 basis point rate cut. But it could also restart its bond buying programme and introduce other measures to support lending to households and businesses. | |
| However, the swift appointment of a new Prime Minister in the UK means the political situation here is now a lot less uncertain, while the pound’s sharp depreciation in the aftermath of the Brexit vote means import costs are rising which may be passed onto the consumer. So, inflation could be on the rise. | |
| Therefore, the BoE may actually hold off cutting interest rates at this meeting or at the very most deliver a small cut – certainly no more than 25 basis points, in my view. A small rate cut will still keep intact the bank’s credibility because it will have done something as promised, while at the same time it will unlikely overcook inflation. | |
| 11.42am BST | |
| 11:42 | |
| Tension is rising in the City as the clock hands tick towards noon.... | |
| 30 minutes to go until #BOE pic.twitter.com/OhG2GndIQF | |
| 11.29am BST | |
| 11:29 | |
| Just thirty minutes to go, until the most eagerly awaited Bank of England interest rate decision since the height of the financial crisis. | |
| Most City traders appear to be expecting an interest rate cut. But most City traders expected Britain to vote to stay in the EU three weeks ago..... | |
| As Augustin Eden at Accendo Markets puts it: | |
| “Equity markets are in the green this morning, perhaps worryingly so given the potential for a negative surprise from the Bank of England at midday. | |
| Traders are currently pricing in an 80% chance of a rate cut, but just take a step back and recall the last time markets priced in an 80% chance of something happening. | |
| 11.20am BST | 11.20am BST |
| 11:20 | 11:20 |
| US Treasury secretary to meet Hammond today | US Treasury secretary to meet Hammond today |
| It’s no secret that the US government is very concerned about the Brexit vote. | It’s no secret that the US government is very concerned about the Brexit vote. |
| And that’s why Treasury secretary Jack Lew is racing to London from Berlin today, where he’s been meeting Germany’s finance minister. | And that’s why Treasury secretary Jack Lew is racing to London from Berlin today, where he’s been meeting Germany’s finance minister. |
| Before jumping on his flight to meet chancellor Philip Hammond, Lew told reporters in Berlin that both sides need to be pragmatic and flexible. | Before jumping on his flight to meet chancellor Philip Hammond, Lew told reporters in Berlin that both sides need to be pragmatic and flexible. |
| Reuters has the key quotes from Lew: | Reuters has the key quotes from Lew: |
| “I will be meeting with the new chancellor this afternoon, I look forward to it. | “I will be meeting with the new chancellor this afternoon, I look forward to it. |
| “We believe that it is in the best interests of Europe, of the United States and the global economy to end up with a result that produces a highly integrated relationship between the UK and the EU. | “We believe that it is in the best interests of Europe, of the United States and the global economy to end up with a result that produces a highly integrated relationship between the UK and the EU. |
| “We think it is critical that negotiations take place in a pragmatic, transparent and smooth manner and for both sides to demonstrate flexibility. | “We think it is critical that negotiations take place in a pragmatic, transparent and smooth manner and for both sides to demonstrate flexibility. |
| Lew has originally been expecting to meet George Osborne, before Theresa May wielded the knife with such vigour. | Lew has originally been expecting to meet George Osborne, before Theresa May wielded the knife with such vigour. |
| To repeat, this is a HUGE reshuffle - total remaking of government. Massive political, cultural and social shift by @theresa_may | To repeat, this is a HUGE reshuffle - total remaking of government. Massive political, cultural and social shift by @theresa_may |
| 10.51am BST | 10.51am BST |
| 10:51 | 10:51 |
| The decision on interest rates will dominate the headlines, but the real story may be in the minutes of the Monetary Policy Committee meeting. | The decision on interest rates will dominate the headlines, but the real story may be in the minutes of the Monetary Policy Committee meeting. |
| The Bank could use the minutes to signal its concerns about Brexit, but won’t want to spark panic in the City either, so the wording will be crucial..... | The Bank could use the minutes to signal its concerns about Brexit, but won’t want to spark panic in the City either, so the wording will be crucial..... |
| .@bankofengland BoE statement today more important than any action: too much uncertainty-markets will panic, not dovish enough-easing undone | .@bankofengland BoE statement today more important than any action: too much uncertainty-markets will panic, not dovish enough-easing undone |
| 10.40am BST | 10.40am BST |
| 10:40 | 10:40 |
| Guardian: UK needs fiscal boost as well as rate cuts. | Guardian: UK needs fiscal boost as well as rate cuts. |
| Cutting interest rates to fresh record lows would be a start, but it’s not enough to rescue the economy from the swamp of a Brexit-induced recession. | Cutting interest rates to fresh record lows would be a start, but it’s not enough to rescue the economy from the swamp of a Brexit-induced recession. |
| Britain also needs a big dose of government spending to help the real economy, in a reversal of George Osborne’s austerity agenda. | Britain also needs a big dose of government spending to help the real economy, in a reversal of George Osborne’s austerity agenda. |
| That’s the Guardian’s view. Here’s a flavour: | That’s the Guardian’s view. Here’s a flavour: |
| The Bank should drop rates, starting this Thursday. But while historic, even a cut would not achieve what might be expected in normal times. Interest rates are already very near what’s called the zero lower bound – the point at which cuts will not stimulate further growth. | The Bank should drop rates, starting this Thursday. But while historic, even a cut would not achieve what might be expected in normal times. Interest rates are already very near what’s called the zero lower bound – the point at which cuts will not stimulate further growth. |
| As for the Bank going in for more quantitative easing, £375bn has already been pumped into the financial system, benefiting the rich and pumping up London house prices. The real boost to growth will only come with a big burst of public spending on infrastructure, services and benefits – the areas that have suffered most under austerity. Theresa May has already talked about infrastructure bonds, but she will need to go a lot further than that. | As for the Bank going in for more quantitative easing, £375bn has already been pumped into the financial system, benefiting the rich and pumping up London house prices. The real boost to growth will only come with a big burst of public spending on infrastructure, services and benefits – the areas that have suffered most under austerity. Theresa May has already talked about infrastructure bonds, but she will need to go a lot further than that. |
| That may be ideologically uncomfortable for the Tories, now seeking ways to mitigate economic and social damage from the referendum they called. But they should consider the words of Mr Carney: “One uncomfortable truth is that there are limits to what the Bank of England can do.” | That may be ideologically uncomfortable for the Tories, now seeking ways to mitigate economic and social damage from the referendum they called. But they should consider the words of Mr Carney: “One uncomfortable truth is that there are limits to what the Bank of England can do.” |
| Related: The Guardian view on the Brexit recession: cut rates and scrap austerity to save the economy | Editorial | Related: The Guardian view on the Brexit recession: cut rates and scrap austerity to save the economy | Editorial |
| 10.05am BST | 10.05am BST |
| 10:05 | 10:05 |
| European stock markets have hit their highest levels since the EU referendum on 23 June. | European stock markets have hit their highest levels since the EU referendum on 23 June. |
| But that’s not a sign of economic confidence. Instead, traders are expecting even more monetary easing from the world’s central bankers. | But that’s not a sign of economic confidence. Instead, traders are expecting even more monetary easing from the world’s central bankers. |
| Philippe Gijsels, head of research at BNP Paribas Fortis in Brussels, explains: | Philippe Gijsels, head of research at BNP Paribas Fortis in Brussels, explains: |
| “European shares have made up most of the lost ground after the Brexit shock. The main, if not only, reason for this is that they anticipate a strong policy response from central banks. | “European shares have made up most of the lost ground after the Brexit shock. The main, if not only, reason for this is that they anticipate a strong policy response from central banks. |
| “A rate cut by the BoE is almost a certainty.” | “A rate cut by the BoE is almost a certainty.” |
| 9.42am BST | 9.42am BST |
| 09:42 | 09:42 |
| Here’s a great chart from the Resolution Foundation, showing how the markets have consistently expected interest rates to rise....and been consistently disappointed. | Here’s a great chart from the Resolution Foundation, showing how the markets have consistently expected interest rates to rise....and been consistently disappointed. |
| Less mañana more hasta la vista - the latest outlook for interest rates ahead of today's MPC decision pic.twitter.com/H495WJGJyE | Less mañana more hasta la vista - the latest outlook for interest rates ahead of today's MPC decision pic.twitter.com/H495WJGJyE |
| 9.34am BST | 9.34am BST |
| 09:34 | 09:34 |
| The last decade have been a ‘game of two halves’ at the Bank of England. | The last decade have been a ‘game of two halves’ at the Bank of England. |
| Once the credit crunch struck in 2007, it slashed borrowing costs to record lows and pumped hundreds of billions into the economy through QE. | Once the credit crunch struck in 2007, it slashed borrowing costs to record lows and pumped hundreds of billions into the economy through QE. |
| But in recent years, the BoE has been sitting on its hands, while telling the UK that borrowing costs were likely to soon start rising. They never did, though, and now a cut seems rather more likely. | But in recent years, the BoE has been sitting on its hands, while telling the UK that borrowing costs were likely to soon start rising. They never did, though, and now a cut seems rather more likely. |
| Here’s a timeline of the key events: | Here’s a timeline of the key events: |
| Related: UK interest rates timeline: the ups and lots of downs | Related: UK interest rates timeline: the ups and lots of downs |
| 9.19am BST | 9.19am BST |
| 09:19 | 09:19 |
| The Brexit referendum has already sent a chill through Britain’s housing market. | The Brexit referendum has already sent a chill through Britain’s housing market. |
| The Royal Institution of Chartered Surveyors’ latest survey shows that enquiries from potential buyers fell sharply last month. | The Royal Institution of Chartered Surveyors’ latest survey shows that enquiries from potential buyers fell sharply last month. |
| Surveyors are also much gloomier. Expectations of future sales fell at the fastest rate since the survey began in 1998, and the balance of surveyors expecting house prices to fall in the next three months hit a five-year high. | Surveyors are also much gloomier. Expectations of future sales fell at the fastest rate since the survey began in 1998, and the balance of surveyors expecting house prices to fall in the next three months hit a five-year high. |
| Reversal of fortune. RICS survey points to risk of UK house price declines. Things were looking rosy not long ago. pic.twitter.com/W7Km6JmGcX | Reversal of fortune. RICS survey points to risk of UK house price declines. Things were looking rosy not long ago. pic.twitter.com/W7Km6JmGcX |