BoE decision to drop rates will have major consequences

In the middle of July the Bank of England was expected to drop interest rates to a new all time low in its history but governor Mark Carney held off the destined move saying the impacts from Brexit had yet to show through in the economic data officials had used to guide them in their decision possibly showcasing some sort of integrity still left in a major central bank.

Three weeks later and the BoE now has a clearer picture to where the British economy is headed with many believing the latest set of economic indicators allow the central bank enough reason to lower the benchmark interest rate for the first time in seven years.

At the time I wrote an article detailing why I thought that a drop in interest rates in the UK would add further pressure on the US Federal Reserve who subsequently opted for normalisation of rates rather than continuation of quantitative easing measures to remain in place.

In years to come hindsight will afford us the lesson of realising that the Fed's decision to go against the majority of its significant counterparts could've possibly be the right course of action but the effects of globalisation together with the alignment of countries economic policies to steady the world's direction of activity might've played a hand in unhinging any common sense that would've entered the fray.

If the BoE does indeed cut rates it simply yields to the coercion from fellow central banks who protect torpid governments who fail to enact the necessary actions to revert an economic crisis of epic proportions from taking place.  

First UK interest rate #BoE cut in seven years expected | #Brexit pic.twitter.com/x98b2ghsJ4

— Andrea Aquaro (@AndreaAquaro) August 4, 2016