BoE suffer collywobbles from Chinese
Bank of England’s chief economist warns on Friday afternoon that the UK , may need to cut Interest rates further, as he underlined signs that the global financial crisis is entering its third phase of turmoil.
Bank of England’s chief economist Andy Haldane cited evidence of a slowdown on the home front and risks to the global economy from China, where an economic decline has overlapped with a stock market retreat that has sent shockwaves through the world’s marketplaces.
Andy Haldane’s view that the Bank may need to resort to alternative measures to protect the UK recovery puts him at odds with Mark Carney, the Bank’s governor, who has signposted that rates may increase early next year.
The recommendation that rates should stay low for longer will be welcomed by mortgage holders but on the flip side of the coin is a blow to savers who have been hoping to see an interest rate rise which will enable savers gain a return on monies held. This was unwelcome news for George Osborne as he looks to highlight his stewardship of the economy following Jeremy Corbyn’s election as Labour leader.
After a month of the GBP/EUR trading range-bound between 1.3500 and 1.3800 we are expecting more of the same. Alexis Tsipras, has beaten the odds to secure a second mandate to lead the Greek government in yet another Greek election. As the austerity pledges made to secure bailouts are no longer under threat we look to another unlikely source for a leverage point for further financial assistance.
Refugees from the Middle East are pouring into Greece at a rate even more financially stable countries would struggle with and certainly much higher than most European countries. The sheer weight of numbers in combination with a tough austerity program mean this could give reason for earlier bailout loans to be written off and open the door for the IMF to re-engage with Greece. With debt relief and further funding, private investment could be coaxed back.