Rates will rise in Brexit deal scenario

Ryan Fowler

October 2, 2019

Homeowners should be ready for the Bank of England to increase interest rates in the face of a deal being struck on Brexit, economist Andrew Sentance has warned. 

Speaking to podcast the LM Experience Sentance said there “aren’t enough hawks on the MPC who are trying to think about things from a different perspective.”

He was an external member of the Monetary Policy Committee of the Bank of England from October 2006 to May 2011

Sentance said: “I hope that if we get a deal it will remove the uncertainty around Brexit and create space for Bank of England to raise interest rates – not in a dramatic way.”

However should there be a no deal scenario Sentance believes rates will stay the same.

He said: “I find it very hard to believe that the Bank would really jack up interest rates if the no deal predictions turn out to be correct.

“I think the difference in scenarios between deal and no deal is that there is space for rates to increase. That is not the case in a no deal scenario.”

However he added: “It does seem if there is ever an argument for keeping rates low it holds sway with the MPC.”

And earlier this week Bank of England (BoE) policymaker Michael Saunders has said the Bank of England is considering cutting interest rates, even if the UK avoids a no-deal Brexit.

Rates have stood at 0.75% since August 2018.

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