ISG-Global: The Bank of England meets this week amid broad-based expectations that it will cut interest rates by 25 basis points to a new all-time low of just 0.25% but Japan-based broker-delaer and wealth management concern, ISG Global has told clients the move will have little effect on the fortunes of the British economy.
With the country’s decision to leave the European Union still ringing in its ears, the Bank’s Monetary Policy Committee will not be expected to disappoint the markets as it did at its last meeting in July but the firm said it has doubts over what such a small monetary policy move can actually achieve.
“25 basis points by itself is likely to prove ineffective. The only thing the Bank of England can do it weaken the pound but with interest rates already at such low levels, it would take another round of quantitative easing to make a noticeable dent in the currency’s value,” said Kit Morton, chief economist at ISG-Global.
The central bank spent most of the pre-referendum campaigning warning of the calamitous consequences of a vote to leave the European Union and, as such, it will feel almost obliged to do something to combat the negative outlook for the economy.
“So far, the huge fallout over Brexit has failed to materialize but it’s far too soon after the referendum to gauge the damage. Any downturn in economic growth will have begun before the vote took place on 23rd June but there’s little doubt that there will be ramifications for Britain; it just remains to be seen how severe those are,” explained Morton.

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