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Bank of England interest rate decision - business live Bank of England cuts interest rates to 0.25% - live updates
(35 minutes later)
12.13pm BST
12:13
What will record low interest rates mean to you? Hilary Osborne explains all here:
Related: UK interest rate cut: how it will affect you
12.12pm BST
12:12
The Bank of England has also decided to start buying £10bn of corporate bonds (debt issued by UK companies) with newly created money.
Similar measures are already underway in the eurozone, though the ECB’s QE scheme.
12.09pm BST
12:09
Pound plunges
Sterling has slumped by more than 1.5 cents against the US dollar in the last few minutes, to $1.315.
That suggests that the Bank of England has gone further than traders had expected.
Pound drops on the first BoE rate cut since 2009. pic.twitter.com/xMzpGqGPq1
Updated
at 12.10pm BST
12.08pm BST
12:08
The BoE has also launched a new programme, worth £100bn, to encourage Britain’s banks to lend to businesses and consumers.
That’s another attempt to ward off a recession.
12.06pm BST
12:06
The Bank of England has also slashed its growth forecasts, following the UK referendum vote.
It now expects growth of just 0.8% next year, down from 2.3% in its May forecasts.
*BOE KEEPS 2016 GDP FORECAST AT 2%, LOWERS 2017 TO 0.8% V 2.3%
12.04pm BST
12:04
It’s official:
MPC vote to cut #BankRate to 0.25% and for a package of measures designed to provide additional monetary stimulus pic.twitter.com/vyqHCgYork
12.03pm BST
12:03
Bank of England boosts QE
The Bank of England has also boosted its quantitative easing programme by £60bn.
That means it will be buying bonds from banks, with newly created money, in an attempt to stimulate the economy.
12.00pm BST
12:00
BANK OF ENGLAND INTEREST RATE DECISION
The Bank of England has cut UK interest rates to 0.25% at today’s meeting.
That’s a new record low, and shows that the central bank is trying to protect the economy from a downturn by easing monetary policy.
More to follow....
11.57am BST
11:57
Hold onto your hats, folks.... it’s just three minutes until the most eagerly awaited Bank of England policy decision since the financial crisis was raging.
We should get the monetary policy decision at noon sharp, but must wait 30 minutes until Mary Carney’s press conference.
Updated
at 11.57am BST
11.53am BST
11:53
Eight minutes, kids.
11.50am BST
11:50
Jeremy Cook of World First, the currency trading firm, is bracing for action in 10 minutes....
Bottle of whisky has just arrived on desk; someone knows it could be one of those days
11.37am BST11.37am BST
11:3711:37
City experts are still making forecasts, as the clock ticks towards noon.City experts are still making forecasts, as the clock ticks towards noon.
ABN Amro’s Nick Kounis predicts a £150bn boost to quantitative easing and a quarter-point rate cut:ABN Amro’s Nick Kounis predicts a £150bn boost to quantitative easing and a quarter-point rate cut:
My expectation for #BoE : (a) GBP 150bn increase in asset purchase target (b) ease conditions in Funding4Lending (c) 25bp Bank Rate cutMy expectation for #BoE : (a) GBP 150bn increase in asset purchase target (b) ease conditions in Funding4Lending (c) 25bp Bank Rate cut
But IG’s Chris Beauchamp points out that the Bank of England could surprise us...But IG’s Chris Beauchamp points out that the Bank of England could surprise us...
Given last month’s distinctly uneventful meeting, plus the range of other options open to Mark Carney and his team, we should be careful before assuming a course of action is pre-determined. Mr Carney, after all, is still known as the ‘unreliable boyfriend’.Given last month’s distinctly uneventful meeting, plus the range of other options open to Mark Carney and his team, we should be careful before assuming a course of action is pre-determined. Mr Carney, after all, is still known as the ‘unreliable boyfriend’.
11.30am BST11.30am BST
11:3011:30
The pound has now recovered its earlier losses, and is hovering unchanged at $1.333 against the US dollar.The pound has now recovered its earlier losses, and is hovering unchanged at $1.333 against the US dollar.
Trader are worrying that the Bank of England may be more ‘hawkish’ than forecast. You can expect sterling to soar if rates are unexpectedly left on hold in 30 minutes....Trader are worrying that the Bank of England may be more ‘hawkish’ than forecast. You can expect sterling to soar if rates are unexpectedly left on hold in 30 minutes....
11.26am BST11.26am BST
11:2611:26
Royal Bank of Canada’s economics team have sent over a useful chart, showing how the financial markets have already priced in an interest rate cut:Royal Bank of Canada’s economics team have sent over a useful chart, showing how the financial markets have already priced in an interest rate cut:
SONIA is the overnight interest rate charged on deposits held in sterling. As you can see, the blue line shows how it is expected to drop to just 0.1% by early 2017.SONIA is the overnight interest rate charged on deposits held in sterling. As you can see, the blue line shows how it is expected to drop to just 0.1% by early 2017.
11.16am BST
11:16
Here’s a handy reminder of the recent disappointing economic data, which has put pressure on the Bank of England to consider a rate cut today:
UK data before and after #Brexit @CNBC pic.twitter.com/NWBKvnhCuh
11.16am BST
11:16
Mark Carney could use his press conference to put pressure on Westminster politicians to boost government spending (as Labour’s John McDonnell argued for this morning):
Actually - if I was Carney, I'd spent the press conference repeatedly saying "fiscal policy has a big role to play here".
11.03am BST
11:03
Lizzy Anderson of the Independent flags up how savers have suffered from seven years of record low borrowing costs:
What low interest rates mean: A pensioner buying an annuity with £100,000 would now receive £5,106 p/a. In early 2008, would have got £7,908
Interest rates since the Bank of England was formed in 1694. A cut today would mean a new 322-year record pic.twitter.com/7hn2qKVglK
The counterfactual, of course, is that tighter monetary policy would have hurt the economy, driving more companies to the wall and ultimately hurting the value of assets owned by savers.
11.00am BST
11:00
ONE HOUR TO GO, until the Bank of England reveals if interest rates are being cut to fresh record lows.
Pound treading water before Bank of England - all those shorts could get stopped if MPC delivers hawkish surprise pic.twitter.com/t8n3dzo7P5
10.49am BST
10:49
The slump in sterling since the Brexit vote is another reason to NOT cut interest rates today, argues economist Shaun Richards:
Just because there is pressure to “do something” does not mean that “something” will “do”.
I would vote for unchanged policy as I waited to see how we respond to the lower value of the UK Pound,which on the old rule of thumb has provided a move equivalent to a 2% Bank Rate cut.
More here:
@graemewearden My thoughts on Super Thursday and the BoE for you https://t.co/3aWkwVlV4e
Updated
at 10.49am BST
10.28am BST
10:28
Six weeks ago, Britain was heading to the polls in the EU referendum.
An awful lot has changed since, but it’s too early to know the full economic impact of the Brexit vote. So while recent data has suggested a contraction in July, the Bank of England may not feel compelled to ease monetary policy dramatically today.
Alan Wilde, Head of Fixed Income, Global, at Baring Asset Management, explains why:
When the MPC met in July, Carney seemed to pre-commit to an easing of policy in August, but there was then a huge amount of economic and political uncertainty.
Meantime, we have a new PM and Government and markets are calm. The risk today is that markets are anticipating too much in the way of immediate easing when the MPC may wish to keep some powder dry to act in the future – should circumstances demand they do so.
10.04am BST
10:04
The UK economics press pack are converging on the Bank of England.
They’ll soon be locked away, and given an early sight at today’s inflation report, and the interest rate decision.
In @bankofengland getting nervous. Fingers crossed they don't go for BoAML @toby_n swap auction idea. Nightmare to understand/write up !
In the meantime getting funny looks as I attempt historic Super Thursday selfie pic.twitter.com/8e02nHiZVN
9.55am BST
09:55
HSBC’s Liz Martins predicts a rate cut, but no fresh quantitative easing, in response to recent disappointing economic data.
QUOTE OF THE DAY: Elizabeth Martins/HSBC: "The surveys have almost without exception pointed to an economy in shock" pic.twitter.com/6Lrunq0KWV
9.52am BST
09:52
Mark Carney was dubbed the “outstanding central banker of his generation” when he was surprisingly appointed as BoE governor in late 2012.
And events like today will test Carney’s mettle, as Eric Lonergan, macro investment fund manager at M&G Investments, explains:
“Today’s Monetary Policy Committee meeting is extremely important and the range of potential outcomes is far wider than market commentators are suggesting. This will be the first serious decision Mark Carney has made since becoming Governor – and we will find out whether he is conventional and timid, or innovative and bold.
“The markets are generally expecting a conventional and relatively dull decision: a cut in base rates of 25bps and additional QE. This may be the case but many other outcomes are possible; for example the cut in interest rates could be much more extreme at 75bps, along with the introduction of tiered reserves, as Japan has done. Alternatively, there could be no change in rates but the introduction of a ‘helicopter money’ programme in coordination with the Treasury.
“The effects of the decision could be of global relevance – particularly if there is a major innovation in policy.
9.43am BST
09:43
A few economists are predicting that the Bank of England will resist the clamour to cut interest rates today:
Most dovish BoE forecasts: JP Morgan and 4Cast going for 50 bps rate cut to 0%.Least dovish: BayernLB, Julius Baer, SEB going for no change