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Bank governor outlines potential for interest rate cut

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Written by: Hannah Uttley
24/02/2016
Bank of England governor Mark Carney has hinted that the Monetary Policy Committee (MPC) could reverse its current stance on interest rates and vote for a rate cut.

 

A report on Sky News said that Carney rebuffed previous statements made about a predicted Bank Base Rate (BBR) rise, indicating a change of sentiment, during a Treasury Select Committee (TSC) meeting in front of MPs on Tuesday.

Asked by TSC member and Labour MP Rachel Reeves if he felt confident that the next movement in BBR would be up rather than down, Carney responded: “I think we should be clear about what that statement says.

“It says: over the forecast horizon interest rates are more likely than not to increase … but we are not on a preset course and of course if risks were to materialise and the global situation were to intensify to the downside, that would have implications for the path of policy.”

However, Carney refused to be drawn explicitly on the subject adding that “the judgement in the Inflation Report provides a general orientation.”

According to Sky, investors are now placing greater probability on an interest rate cut occurring in the coming months rather than an increase, amid concerns about global economic growth.

In an interview with the BBC earlier this month, former chair of the Financial Conduct Authority Lord Adair Turner warned that BBR could stall at around 2% until 2020.

Recent projections by Berenberg bank have placed a rise in the BBR at November at the earliest.

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