Market view: Industry must work harder to give real returns
A cut in the UK’s growth forecast means the financial community will need to work hard to generate returhns in future, said Gervais Williams, managing director of MAM Funds.
Mr Williams was commenting on today’s announcement by the Bank of England that it expects UK growth forecast to be close zero for the rest of the year, compared to the 0.8 per cent predicted in May,
He said: “All of us in the financial community will need to work a little harder to generate returns in future and these will come from adding value through asset selection or bottom up stock selection, especially on a multi-cap basis.”
Azad Zangana, european economist at Schroders, said a fall in inflation could also signal a further easing in monetary policy including a cut in interest rates.
“However, what makes this latest forecast more interesting is that not only does the forecast already take into account the latest round of quantitative easing and the government’s Funding for Lending scheme, but it is also assuming interest rates will be cut further.”
“We believe that the bank may choose to hold off cutting interest rates further, at least until it can fully assess the impact of the Funding for Lending scheme. However, we do expect the Bank of England to continue its quantitative easing programme beyond the £375bn of purchases currently planned.”