The Bank of England is expected to cut interest rates and could unveil a new round of stimulus on Thursday, while cutting its economic forecasts for the U.K. weeks after the epoch-making Brexit vote.
Most economists now forecast that the Bank's rate-setting committee will cut interest rates to a new historic low of 0.25 percent, its first action on the base rate in more than seven years, when it cut to the current rate of 0.5 percent.
After all, last month, the Bank said "most members of the committee expect monetary policy to be loosened in August."
Many are also now speculating that there could be a new bond-buying program to help stimulate the U.K. economy, after a series of data points suggested that the country had slowed around the time of the historic referendum on European Union membership, which delivered a vote to leave that surprised many.
Attention will also focus on its latest inflation report, which is likely to downgrade the outlook for the post-referendum U.K. Inflation forecasts are set to rise following the notable weakening in sterling.
'50-50 chance of recession'
The National Institute of Economic and Social Research, a U.K. think tank, called for a "sledgehammer" from policymakers on Wednesday, as it warned that there was a 50-50 chance of a U.K. recession in the next 18 months.
However, there are some other investors who believe that BoE would be in a hurry to reduce interest rates, as that might make them look like a loose cannon. The fall in value of GBP during the last month might start giving positive influence to the economy, and the for the change of interest rates they could wait to do that in September.
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.