Money Minute Monday 27 January: Brexit and interest rates

Britain leaves the EU this week, and both the Bank of England and the US Federal Reserve decide on interest rates.

This week, on Friday, Britain officially leaves the European Union. We then move to a transition period during which Britain and the EU will attempt to finalise their future relationship. Currently, the deadline for finalising that deal is the end of this year. So while this may be the end of the beginning for Brexit, it won’t be falling out of the headlines just yet. 

Perhaps more important for UK investors this week though, is the Bank of England’s next monetary policy decision. This will be announced on Thursday. The decision is finely balanced. Many analysts think the Bank might cut the key interest rate from 0.75% to 0.5%. 

However, the stronger-than-expected survey data from the manufacturing and services sectors that we saw on Friday just past might stay the Bank’s hand. 

The Federal Reserve also gives its latest decision on monetary policy in the US on Wednesday. Rates in the US are almost certain to remain on hold.

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