UK slowdown will see BOE cut rate to near zero - NIESR

According to a latest report published by National Institute for Economic and Social Research (NIESR) on Wednesday, the Brexit vote is likely to see a “marked” slowdown as uncertainty and a tightening of financial and credit conditions damp business investment and consumer spending. 

Hence, the NIESR predicts that the Bank of England (BOE)) will probably cut interest rates close to zero to avert recession triggered by the Brexit decision. 

The institute expects that the UK economic growth will probably slow to 1.7% in 2016 and 1% in 2017, an outlook that will prompt the BOE’s MPC to lower its key rate to 0.1%, with cuts in August and November. The rate has been at 0.5% since March 2009.

While NIESR predicted inflation will accelerate to just over 3% at the end of 2017 -- well above the BOE’s 2% target.