A former MPC member has warned that further cuts are coming to interest rates.
The UK should expect to see more interest rate cuts and further stimulus measuresas the UK economy slows, according to former member of the Bank of England’s monetary policy committee David Blanchflower.
Writing in the Guardian he said the Bank did the right thing by reducing rates last week, but earnedthat the uncertainty following the Brexit vote is likely to continue for years:
"The good news is you should be able to make money by buying shares and gold. The bad news is that this will widen inequality further, as it does nothing to help the poor, the young and ordinary strugglers who don’t have assets.
"The UK economy is not booming, as claimed by several commentators and newspapers. The slowing of the economy is not because the governor of the Bank of England, or economists like me, talked the economy down. It is the lack of a post-Brexit plan and the rise in uncertainty that have caused the UK economy to nosedive.
"This uncertainty will not be resolved for several years. The good news is you should be able to make money by buying shares and gold. The bad news is that this will widen inequality further, as it does nothing to help the poor, the young and ordinary strugglers who don’t have assets."
Yesterday current MPC member Ian McCaffertypredicted that a further interest rate cut could be coming and that more quantitative easing is likely to be required to ensure that economic uncertainty does not grip the UK (full story here).
