Money Minute Thursday 30 January: will the Bank of England cut interest rates?

Today's Money Minute looks ahead to the Bank of England's decision on interest rates - where the policy committee remains split on whether to cut or not.

The big economic event of today for British viewers is the Bank of England’s interest rate decision at mid-day. Markets are pretty evenly split as to whether or not the Bank will cut Britain's key interest rate from 0.75% to 0.5%. 

On the one hand, outgoing governor Mark Carney – whose last meeting this is – has hinted at there being a case for cutting rates, as economic data in the UK weakened at the end of last year. However, there have been signs of a post-election bounce, notably the most recent surveys of business activity for January.  So it’s an unusually uncertain rate decision. 

If the Bank does cut, the pound is likely to dip, but by how much will depend on just how pessimistic the tone is. Share prices, however, would probably rise on the prospect of cheaper money.  

If the Bank stays on hold, that’s likely to mean a stronger or at least static pound. But it would be less positive for shares.

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