Traders watching their Forex trading strategies may have some adjusting to do on Thursday, when the Bank of England’s nine-strong Monetary Policy Committee (MPC) meets amidst speculation that a rate cut is in the offing.
At least one policy maker believes that, with gloomy news gathering about the performance of the UK economy, a cut in borrowing costs is now necessary to shore up stuttering growth.
Martin Beck of the Oxford Economics consultancy told Guardian journalist Katie Allen yesterday that a slew of surveys in April had highlighted weak activity, indicating that growth may slow in Q2 2016 compared to the first quarter’s already feeble performance
He added: “Uncertainty caused by June’s EU referendum has been widely blamed. But with the economy slackening well before the referendum date was announced, it is difficult to believe that this is the only story. One thing that is clear is that the possibility of a cut in interest rates is looking ever less outlandish.”
While a rate cut is not expected by experts at this week’s meeting, it seems a good deal more likely at a subsequent meeting in the light of a recent run of bad economic data, which has undermined signals from policy makers that interest rates were going nowhere for the foreseeable future and, if they were to change, it would be in an upward direction.
Experts now anticipate that the committee could well at least discuss prospective rate cuts this week, even if most of its members are not yet close to voting for such a change. Two prominent MPC members (external member Jan Vlieghe and the Bank’s Chief Economist, Andy Haldane) have discussed rate cuts in the past and are seen as the most likely committee members to push for lower borrowing costs after a number of recent business surveys indicated that the UK economy is stalling.
Currency watchers working out how to trade Forex most profitably will be keeping a close eye on the MPC this Thursday.