1. The Bank of England issued its three-pronged post-Brexit vote fiscal attack today.
These are:
• A 0.25% interest rate cut
• Plans to buy up to £10bn of UK corporate bonds
• Extension of the asset purchase or QE scheme from £375bn to £435bn
2. This is all part of a plan to boost the exchange rate, most noticeably punishing businesses and holidaymakers at the moment. The move aimed to combat weaker economic activity and slowing growth, which the Bank expects to result in falling employment levels from the all-time highs reached this year.
3. Four lenders: Coventry BS, Santander, Barclays and Natwest were the first to pass a rate cut on to their customers within two hours of the rate change.
4. The Bank of England said it ‘fully expects’ lenders to pass on the 0.25% rate cut to consumers. In a bid to make lenders walk the walk, it launched a new Term Funding Scheme, which is ready to lend to banks at close to Bank Rate. The scheme is available for four years and targeted to stave off lender complaints about ‘profitability compression’.
5. The MPC expects unemployment to ‘fall back in three years’ time’ and inflation to hover above the 2% target.
6. The majority of MPC members expect they will have to vote for another Bank Base Rate cut this year.
7. Interest rates hit an all-time low today at 0.25% after seven-and-a-half years at 0.5%. But they have been held for longer, or 14 years in fact at 2% from October 1937 to November 1951.
8. Testament to the fact Mark Carney keeps us guessing, just 43% of Mortgage Solutions readers predicted an August rate cut in our poll. The majority expected the Committee to vote to maintain at 0.5% today.
