Beyond often gnomic “forward guidance”, the Bank of England is usually reluctant to give too much away about interest rate decisions, and understandably so.
Much can happen in the course of a few months in a dynamic economy even in normal times. Factoring in the effects of Brexit and the Covid-19 pandemic adds to the uncertainties even more. These are, obviously, unprecedented times for policy makers, but the Bank’s governor, Andrew Bailey, and its chief economist, Huw Pill, have made little attempt to dissuade the markets from their assumption that interest rates will be raised by the end of the year.
Even if they moved, in relative terms, tenfold, from the current 0.1 per cent to 1 per cent, that would still represent a near all-time record low. Much the same effects would be seen in market interest rates for businesses and home buyers if the Bank partially reversed quantitative easing.
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