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Originally Posted by Big Brian
The BoE did not say there 'Would Be' a recession. He will cause it if there is by lowering interest rates.
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Lowering interest rates doesn't cause recession. It's monetary stimulus. The point of it is to make borrowing cheaper and credit more available to encourage businesses, especially, to borrow and invest. In the case of individuals cheaper credit increases demand.
This comes at the expense of inflation so it's a balancing act.
Quote:
Originally Posted by Big Brian
He'll sort it out with QE so there really isn't nothing to worry about. The Markets have steadied and the £ will too. However, if the BoE are not careful they could trigger the predicted recession.
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We're almost certain to get a recession. There is nothing the BoE can do about that. The best case is that it's a very slight recession though, it won't be anywhere near as bad as the one from a few years ago, so not pleasant but not end of days stuff.
Small drop in employment, small drop in tax revenues, government debt increasing somewhat to compensate as stabilisers kick in. Some tax rises, some spending cuts.
Running QE to infinity isn't going to happen and I'm not sure what impact you think QE would have. Depending on the form it takes it's likely to further weaken Sterling and not necessarily feed into the productive economy. Last time much of it ended up in housing and stocks.
The markets are steadier from the initial shock, nothing else. We've done the first drop on the rollercoaster, a couple of years to go yet.
If your indifference to the single market is based around that you think the shock to the economy is over and the only way is up from here check out the research that's been and is being done.
The BoE aren't doing Project Fear and aren't trying to trigger a recession. They are offering forward guidance and Project Reality. Their predictions agree with the consensus views and are middle of the road.
If they are wrong, excellent.