Business

Mark Carney hints at interest rates cut in wake of Brexit vote

Mark Carney has hinted at a cut in interest rates this summer

INTEREST rates may be cut as early as this month in a bid to bolster the UK's economy after the shock Brexit vote last week.

Bank of England governor Mark Carney hinted at the measure in a major speech in London.

His address was designed to calm financial markets and the FTSE 100 made significant gains while the governor was on his feet.

But Mr Carney warned economic growth could be hit "for some time".

A cut in interests rates - which have been 0.5 per cent since 2009 - would provide a boost to home owners and also to those seeking to make large business investments.

And commercial property agents CBRE said a lower rate of interest in the wake of the EU referendum result would "bode well" for the north's real estate market.

Mr Carney said in his personal view, "some monetary policy easing will likely be required over the summer", signalling a rate cut this month or in August.

He also hinted that the Bank could pump more cash into the economy under its quantitative easing programme and said the Financial Policy Committee could take action when it meets next Tuesday.

While the rate cut prospects was manna for city investors, it sent the pound sharply lower once more.

Mr Carney said the UK was grappling with "economic post-traumatic stress disorder" following the vote to leave the European Union.

However, he said the decision would not be his to take alone and the final call would be made by the Monetary Policy Committee during its inflation report in two week's time.

He said: "In my view, and I am not pre-judging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely to be required over the summer."

Meanwhile, CBRE's managing director in Belfast Brian Lavery said that although some investors may hold off activity due to the uncertain political and economic landscape, others would see an advantage in the current situation.

“Currency movements as a result of Brexit could see a unique buying opportunity emerge. The uncertainty created could keep interest rates lower for longer which bodes well for investment in real estate," he said.

"Local investors have remained active particularly outside Belfast in locations such as Banbridge, Strabane and Coleraine."

Mr Lavery was commenting following CBRE's latest bi-monthly research report on the state of the commercial property market.

It found the first half of the year had seen good results for office lettings and retail.

“In total we recorded 10 investment transactions totalling £70 million signed in Q2, bringing the year total to £103m in 15 transactions. Whilst some decisions have been put on hold in the short term, we feel that other properties due to be brought to the market will proceed regardless in H2 2016, with currently £75m worth of sales to be launched," added Mr Lavery.

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