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How low could UK base rates go?

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Longterminvestor

Administrator
There are strong rumours that the Bank of England will look to reduce UK base rates in the short term. Realistically, how low can they go?
 
P

PostBrexitInvestor

Member
Sales on the high street are dire but not sure another 1/4 point drop in base rates will prompt a new wave of consumer spending!
 
F

FWL

Member
All of a sudden it seems that rates are heading downwards. Retail is terrible out there, rumours of another retail outlet on the verge of administration.
 
P

PostBrexitInvestor

Member
We have gone from being hopeful (if not upbeat) to being downright pessimistic. How?
 
L

Longterminvestor

Administrator
We only need to look at EU rates, currently 0%, to see how far UK base rates could fall in theory. Whether they will or not is a different matter but let us not forget that the OECD recently released a report suggesting that the UK economy will perform better than the EU in the short to medium term. This despite Brexit!

It does appear that the EU is coming under significantly greater scrutiny than the UK. We only need to look at Greece and Italy to see what a mess some areas of the EU economy are in.
 
P

PostBrexitInvestor

Member
If you have any interest in the future performance of the UK economy V the EU economy, this is a fascinating read:-


It is a German reporters take on Brexit from Germany - fascinating.
 
F

FWL

Member
It seems to be a given that the Bank of England will reduce UK base rates in the short term despite the OECD recently suggesting that the UK economy will outperform Europe in the short to medium term. Ironically, the ongoing issue with the coronavirus is almost certain to have a short-term impact on the worldwide economy and could push base rates around the world lower.

When you consider that ECB interest rates are 0% and in the UK currently 0.75% there is a real danger of flooding the property market with cheap short-term finance. As and when interest rates finally start moving towards their “historic levels” many people may experience a significant increase in their mortgage repayments.

Who would be the governor of the Bank of England, this is a balancing act that is almost impossible to gauge with so many variables.
 
D

diyhelp

Active Member
Well well, after Mark Carney suggested that the Bank of England would lower interest rates they have performed a U-turn. Each time the governor of the Bank of England makes a prediction he seems to get it all wrong. Are investors losing confidence in Mark Carney?
 
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