The Bank of England could cut its rates after vote for Brexit, according to Bank of America Merrill Lynch as it warns of imminent recession


Mark Carney is facing his toughest time as Bank of England governor since taking on the job in 2013 (Source: Getty)

The Bank of England could be about to cut interest rates following the vote for the UK to quit the European Union.

Experts at some of the world’s biggest banks have lined up say they’re expecting the Bank to ease further over rates at its next monetary policy meeting in July, and potentially restart quantitative easing (QE).

Economists have forecast that UK growth and gross domestic product (GDP) will stall in coming years as uncertainty over the UK’s trade relationships weighs on investment.

UK interest rates has been at a record low of 0.5 per cent since 2009, severly reducing the bank’s options for supporting the economy.

“We expect the UK to quickly enter recession, the Bank of England to cut rates [to zero] in July and restart QE, potentially in August,” wrote Bank of America Merrill Lynch analysts in a note to clients.

“We expect the Bank of England to follow the financial crisis template: make liquidity easily available, ignore the one-off inflation shock from sterling and ease policy.”

Investment bank Goldman Sachs believes that a cut to 0.25 per cent will happen in August, while others are expecting a reduction to zero in coming months.

On Friday BoE governor Mark Carney, in a rare live TV appearance, announced measures to support the markets following the shock vote for Brexit.

Read more: FTSE 100 plummets in response to Brexit vote

“As a backstop, and to support the functioning of markets, the Bank of England stands ready to provide more than £250bn of additional funds,” said Carney, adding, “In the coming weeks, the Bank will assess economic conditions and will consider any additional policy responses.”