In a speech aimed at calming the markets and reassuring business leaders, governor of the Bank of England, Mark Carney, has laid the ground for potential interest rate cuts over the summer.
Hinting that the cost of borrowing could be cut further from its current rate of 0.5%, Carney advised that a preliminary assessment would take place on the 14th July, followed by a full forecast due in the August inflation report.
Carney said that the Monetary Policy Committee (MPC) will look to balance the need to stabilise inflation, which could be fueled by a weaker pound, with supporting growth and jobs.
Currently the governor is siding with supporting growth through lower borrowing costs.
“In my view, and I am not prejudging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,”
He added that if interest rates were too low the knock on effect to bank profitability could reduce credit availability, or make it more expensive.
“I can assure you that in the coming months the Bank can be expected to take whatever action is needed to support growth subject to inflation being projected to return to the target over an appropriate horizon, and inflation expectations remaining well anchored.”
“The question is not whether the UK will adjust, but rather how quickly and how well,”
he said, but also stressed that there were limits to what a central bank could do.
Jeni Browne, head of residential and buy to let lending looks at how you can protect yourself in this period of economic uncertainty.