Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Bank of England Expected to Cut Interest Rates to Historic Lows

  by    1   1

On Thursday, the Bank of England will meet to decide on an interest rate cut. It’s widely expected by economic officials that the UK’s central bank will cut rates 25 basis points, from .50% to .25%. What will this mean for a country already reeling from the economic crunch post Brexit?

man hitting a piggy bank with a hammerA rate decrease will prove to mark a historic low. According to International Business Times:

The BoE has kept interest rates at a historic low for the last seven years and the expected cut would bring the benchmark into uncharted territory. When Britain’s central bank cut the benchmark to 0.5% in 2009, the lowest since the BoE was founded in 1694, it described the figure as an ‘emergency rate’ and for the past seven years savers, institutions, fund managers, and economists have believed a rate rise was just around the corner.”

Few anticipate a rate lowering to zero or even negative levels; however, it’s still not out of the question. Other central banks, including Danmarks Nationalbank, the European Central Bank, Sveriges Riksbank, the Swiss National Bank, and Bank of Japan, have all cut rates to or below zero over the last few years.

A rate below zero interest would almost certainly drive gold prices up. Britain’s largest bank, HSBC, published a report last March concluding that negative interest rates are great news for gold investors. After the Bank of Japan went negative, a gold buying frenzy ensued.

Just before the Brexit vote, Britain began hoarding gold, with some online sites seeing a 5 to10% increase in sales. Just like Japan, it’s likely many British citizens will follow suit with an increase in buying gold and silver to hedge against inflation and preserve their wealth.

Some pundits see Britain’s interest manipulation as evidence central banks are “running out of options to lift fragile economies after the 2007 crisis, even by the unconventional means they have adopted so far.” The IBT article states:

Some say it is time to take up more radical measures, such as helicopter money, which consists of a bank printing money and dropping in onto citizens in order to kick-start the economy.”

“Free” Helicopter money is intended to prompt everyday citizens to spend rather than save, which is contrary to how to get out of a recession. Saving for investment and production is how you crawl out of an economic downturn. Increasing the money supply will only decrease the value of the pound, much as it’s done with the dollar. With no incentive to save, consumers will only get themselves further into debt with a currency that is becoming less valuable every day.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Chinese Central Bank Halts Gold Acquisitions

China has called quits on its 18-month gold buying spree, causing precious metal prices to stumble this week as the world’s largest buyer unexpectedly closes its tab. In 2023, the People’s Bank of China purchased more gold than any of the world’s other central banks, swelling its reserves of the precious metal to more than […]

READ MORE →

What a China-Taiwan Conflict Could Mean for Semiconductors, Gold

American-made weapons will soon be bound for Taiwan, American lawmakers are telling Taiwanese President Lai Ching-te, sending shockwaves of uncertainty through electronics and metals markets this week.

READ MORE →

Which Central Banks Are Selling Gold?

Central bank gold buying has been a significant factor in the yellow metal’s spectacular run-up to new record highs. But with its recent small correction downward, it’s a good time to look at which central banks are selling — and why.

READ MORE →

Death of Iranian President Carries Gold, Copper to New Record Highs

Amid ongoing tension in the Middle East, Iranian President Ebrahim Raisi and the foreign minister have been confirmed dead Monday after a helicopter crash. The officials’ shocking demise casts additional investor doubt on a region already plagued by economic upheaval, with supply chain uncertainties fueling record-high metal prices this week.

READ MORE →

South Korea’s New Way to Pursue Safety

While gold bullion is most often sold in bar or 1oz coin form, the Korean retail market is benefitting from gold’s latest success with a very atypical marketing strategy. It has been traditionally thought that investors prefer larger increments of bullion because they simplify calculations and have a lower transaction cost than buying the same amount of gold in smaller increments. Demand for traditional bars and coins in South […]

READ MORE →

One thought on “Bank of England Expected to Cut Interest Rates to Historic Lows

  1. Seattle logo design says:

    Gold and silver are going to skyrocket once QE can’t be pumped anymore. Those holding and buying now will be paid beautifully once this all ends.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now