What's your next move after 0.25% rate drop?

THE BANK of England's latest interest rate cut was meant to offer relief.

- By Harvey Jones

Instead, it left many disappointed. Governor Andrew Bailey and the monetary policy committee (MPC) reduced the base rate by a modest 0.25% last Thursday, from 4.5% to 4.25%. It was the second cut this year, but felt like a missed opportunity to inject life into the floundering UK economy.

Carsten Jung, head of macroeconomics at the Institute for Public Policy Research, said the MPC should have cut by 0.5%. “Waiting to take decisive action until declining growth directly impacts households, was a mistake.”

Bailey stuck to his usual line of “gradual and careful” decision-making, despite the urgency of the situation. Markets now expect just two more rate cuts this year - in August and November.

That’s disappointing for mortgage borrowers, but could offer savers and annuity purchasers one last chance to lock in today’s higher returns.

So what does it mean for you?

SHARES

The UK stock market barely moved on the news, as they had already priced in a modest cut, but ended Thursday lower after a negative reaction to the UK-US trade deal.

The FTSE 100 has nonetheless jumped more than 10% over the last month, reviving as Donald Trump softens his stance on trade tariffs.