Following the Bank of England’s decision to keep the interest rates the same, Stuart Law, CEO of marketplace lender Assetz Capital says it’s as an ‘easy but incorrect choice’ by the Bank of England and predicts a drop in interest rates in the near future.
“With inflation at a three-year low and details of the UK’s withdrawal from the EU still uncertain, the Bank of England has taken the easy but incorrect choice to keep interest rates on hold.
“Depending on how things unfold immediately following January 31st, there’s still a high probability in our view that we could see interest rates go down shortly – even to the point of eventually introducing negative interest rates – to attempt to stimulate the economy further and address the global slowdown that is partly due to trade wars.
“Traditional bank savings would then represent a guaranteed loss versus inflation for businesses and consumers alike, which would drive people to alternative sources of finance like P2P and marketplace lending.”
Markus Kuger, Chief Economist at Dun & Bradstreet comments:
“Despite speculation and calls for monetary stimulus, today’s decision from the Monetary Policy Committee to maintain interest rates is not surprising with the Brexit deadline now upon us. With consumer prices growing by the slowest pace in three years, global headwinds are likely to continue to impact the outlook for the British economy and Dun & Bradstreet’s latest Industry Report forecasted real GDP growth of just 1.3% in 2020.
“Businesses still face uncertainty about the real impact of Brexit, but our data also shows positive signal such as an overall reduction in corporate liquidations (down 1.1% year on year) and an improvement in the percentage of B2B payments made on time (average delay down to 13.5 days, closer to the European average).”
Paresh Raja, CEO at Market Financial Solutions, said:
“The Bank of England treads carefully when deciding on the interest rate, so the fact they’ve decided to leave it at 0.75% is an important decision. Investor confidence is returning, and we are likely to see the markets post a modest performance in the aftermath of this announcement.
“Low interest rates work to the advantage of borrowers; I expect many lenders to review their rates and consider further cuts to ensure they have an edge of their competitors. When it comes to mortgages, however, this doesn’t necessarily mean getting a loan from a bank will become any easier. To minimise their risk exposure, banks are tightening their lending criteria, making it more difficult for investors and businesses to access the finance they need to buy a property.
“Overall, I’ll be interested to see how this rate cut affects the property market, and whether the Bank will consider further rate hikes over the coming months depending on how Brexit plays out.”
Andrei Dikouchine, Founder of 3S Money says:
“Yesterday’s announcement by the Bank of England was all-around positive and rewarding for sterling bulls.
The forward markets are now pricing a much lower probability of a rate cut in May providing support to the currency. But most important was the commentary and not the decision itself. In particular, Governor Carney stated in his last meeting at the helm of the bank that the preliminary data post-election looked positive. It felt that way even in the run-up to the election, but hearing the same from an always cautious Governor is a totally different matter.”
