LONDON (Reuters) – Goldman Sachs expects the Bank of England to cut interest rates by 50 basis points at its March meeting, saying the coronavirus outbreak is likely to push the UK economy to the brink of recession in coming months.
“The BoE has sufficient policy space to respond to this weakness,” Goldman’s economists wrote in a note dated March 4.
Hot on the heels of the 50 basis point cut by the U.S. Federal Reserve earlier this week, economists expect other major central banks to follow suit. The BoE’s next scheduled policy announcement is on March 26.
Money markets price in a 25 basis point cut from the BoE in March.
The central bank’s next governor Andrew Bailey however said on Wednesday that the bank should wait to get more clarity about the economic hit from coronavirus before making any decision to cut interest rates.
(Reporting by Thyagaraju Adinarayan; Editing by Dhara Ranasinghe)