The spectre of deflation could prompt the Bank of England to cut interest rates by 0.25 per cent or engage in more quantitative easing in 2015, Nick Dixon, Aegon UK’s investment director, has said.
Mr Dixon said: “The threat of deflation, together with sterling’s gains against the euro, have created an unexpected challenge for the BoE, and we could see a 0.25 per cent interest rate, and even a reinjection of quantitative easing, before the year is through.”
Suggestions that rates could be cut further has led some commentators to suggest that UK growth is weakening, rather than strengthening. Accordi
Their comments came after the Bank of England warned in its 58-page Inflation Report: February 2015, warned that inflation could fall below zero in the first half of the year.
David Whittaker, managing director of Mortgages for Business, which is headquartered in Sevenoaks, Kent, said: “While some borrowers may be tempted to wait for lenders to drop their rates further, now is the time to fix.
“The UK mortgage market has already factored in such low inflation rates and is offering an array of competitive mortgage deals.”