You are here: Home - Investing - Experienced Investor - News -

EU remain vote may still lead to interest rate cuts – MPC

Written by: Samantha Partington
The UK may need to cut interest rates even if the country votes to remain in Europe if the economy fails to improve, a Bank official has warned.

Speaking to an audience at The London Business School, Gertjan Vlieghe, an external member of the Monetary Policy Committee said following a vote to remain, he wanted to see ‘convincing evidence’ of an improvement in the economic outlook, in line with previous forecasts.

“If such improvement is not apparent soon, this will reduce my confidence that inflation is likely to return to the target within an acceptable time horizon without additional monetary stimulus,” he said.

Vlieghe said the upcoming referendum made its usual tools for measuring growth ‘less informative than usual’ because households and companies tended to postpone spending until after major events such as this.

If the UK votes to remain, he expects the release of any pent-up desire to spend, which will boost economic growth.

UK Gross Domestic Product (GDP) growth has continued to slow from around 3% in 2014, to approximately 2% in 2015, to less than 2% in 2016 so far.

Persistently disappointing global growth, government plans to reduce its deficit, weaker than expected productivity growth, and uncertainty about the upcoming referendum on the UK’s membership of the EU, are all factors creating   a drag on GDP.

“The challenge for the Committee is that we do not know how much of the slowing in growth is due to the referendum, an effect which should be short-lived, and how much of it reflects a more fundamental loss of underlying momentum, which might be more persistent,” he added.

The rate of inflation, as measured by the Consumer Prices Index, fell from 0.5% in March to 0.3% in April – moving further away from the Bank of England’s target of 2%.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Property supply stagnates in April

New property listings across the UK have stagnated, rising just 0.5% in April following a 4% fall in March, according...