Possible Brexit base rate change: key committee to comment today

Possible Brexit base rate change: key committee to comment today

The Bank of England is expected to set out its latest thinking on the UK's Brexit economic changes today - including what this might mean for interest rates. 

Last week BoE governor Mark Carney suggested an interest rate cut may be triggered as early as next month in a bid to stave off recession fears following the UK's vote to leave the European Union.

"Next Tuesday, the independent Financial Policy Committee [of the bank of England] will release its biannual assessment of risks in its financial stability report, and it will take any further actions it deems appropriate to support financial stability" Carney said last week.

Commentators have speculated that one possible action to be recommended by the FPC is a temporary relaxation in the amount of capital banks are required to hold - in effect, allowing them to lend more. Financial news service Bloomberg says Carney is considering such an initiative, which would some capital.

Indirectly this could lead to a BoE base rate reduction which may filter to mortgage lenders as well.

Over the weekend Chancellor George Osborne warned that Britain faced a "very challenging time" because of the Brexit decision and urged the Bank of England to use its powers to avoid "a contraction of credit in the economy" - just as it did during the banking crisis of 2008. 

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