You are here: Home - Saving & Banking - News -

Argonaut calls for Base Rate cut

Written by:

The Bank of England must slash interest rates by 1% to bolster the UK banking system and boost investor confidence, says Argonaut.
European income fund manager Oliver Russ says the Bank of England must ‘wake up’ and cut rates as soon as possible in order to de-stress the financial system and housing market, and help shore up UK banks, which he believes are among those most under threat from the liquidity crunch triggered by the US sub-prime crisis.

He argues that both the Bank of England and US Federal Reserve should cut their respective rates by 0.5% in December and by at least a further 0.25% in January, or face a worsening crisis and, in the case of the US at least, a probable recession.

If the US does slide into recession – something Russ believes the country would be ‘very lucky’ to avoid – he argues that the knock-on effect would be particularly damaging to economically sensitive sectors such as materials and resources.

Russ said: “A downgrading of growth expectations could benefit investors in interest rate sensitive areas, particularly high yielding stocks such as utilities and telecoms. Most of Continental Europe is in far better fundamental shape than the UK and Ireland, with much lower debt levels leading to less sensitivity to rates.

“Confidence could return swiftly but it depends on the Fed and BoE, which need to cut rates hard and fast to unblock the credit system. UK rates are very high by international standards, and the BoE needs to wake up and start cutting. In my view, UK rates need to come down by 1% as soon as possible. This would enable the excesses that have built up in the economy to be gradually worked off, rather than undergo a painful and sudden readjustment.

“Even the Bank agrees that cuts might be required, but stated in its minutes that a cut now might look like a panic measure. They should be more concerned with economic reality, not PR.”

Related Posts


Tag Box




Financial fitness

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.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

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... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Government urged to develop flood strategy

The Association of British Insurers (ABI) has published a report calling on the Government to implement a 25-year flood strategy.