Could interest rates fall further in 2020?
Mark Carney, governor of the Bank of England (BoE), has said that interest rates could be cut if UK economic growth remains weak.
Carney told a conference on inflation in London on 9 January that the potential for “near term stimulus” was under discussion by the BoE’s Monetary Policy Committee (MPC).
“As is entirely appropriate, there is a debate at the MPC over the relative merits of near term stimulus to reinforce the expected recovery in UK growth and inflation,” Carney said.
“With the relatively limited space to cut Bank Rate, if evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response,” he added.
The next MPC announcement is slated for Thursday 20 January.
The committee was split on whether to cut rates to 0.5 per cent, down from the current 0.75 per cent, in December and November 2019.
The UK economy grew at its joint-weakest average rate since 2012 at the end of last year. That trend has continued into 2020, despite the so-called “Boris bounce”, which was hoped for following the Conservative election victory with a substantial majority.
Carney’s comments saw the value of the pound drop against the dollar by 0.4 per cent to $1.30.