UK interest rates expected to go lower than after the 2008 crash

This would weaken sterling values, and could hurt Irish exporters

UK interest rates expected to go lower than after the 2008 crash

David Cheskin / PA

The Bank of England is expected to cut interest rates later for the first time in more than seven years, in a move forced on policymakers after Britain voted to leave the EU.

The governor, Mark Carney, hinted after the referendum result that the Monetary Policy Committee (MPC) could this summer cut Bank rate and pump cash into the economy through its quantitative easing, or asset purchase programme.

Such moves would be aimed at stimulating growth in an economy that was already slowing ahead of the Brexit vote.

Financial markets see a reduction in rates from 0.5% to 0.25%, with economists at Hargreaves Lansdown suggesting it is "now probable" rates will be cut at midday.

If they are, it will mark interest rates down below the 0.5% rate introduced by the Bank at the height of the financial crisis in 2009.

Mr Carney has stressed of his reluctance to reduce rates below 0.25%, and has warned:

"If interest rates are too low or negative, the hit to bank profitability could perversely reduce credit availability or even increase its overall price."

The chief economist at IHS Global Insight, Howard Archer, believes that The Bank is utilising a number of measures to help bolster the economy, as well as cutting rates:

"We suspect the Bank of England will extend its Funding for Lending scheme and it may very well also return to quantitative easing, which has been on hold since November 2012 with the stock purchases of £375bn."