The Bank of England is widely expected to cut interest rates for the first time in seven years this week as it assesses the fallout from the UK’s vote to quit the European Union.
The Bank held fire in July in the immediate aftermath of the Brexit vote, catching some analysts off guard. Policy committee members will meet on Thursday.
The Bank shocked markets with its decision to hold off last month. Futures prices indicated there was around an 80 per cent chance of the MPC slashing rates, while City A.M.'s Shadow MPC, typically much more hawkish than the Bank, even voted for a cut to interest rates for the first time since the recession.
At the end of last week the FTSE 100 ended the week down 0.1 per cent after five straight weeks of gains, as it fell from Wednesday’s year-to-date high.
It has recovered all of the losses triggered by the Brexit vote, putting it about six per cent above its pre-Brexit level, thanks to the high international exposure of its constituents.
RBS was last week savaged in the latest round of European banking stress tests.
The assessment of how European banks might perform in adverse conditions found RBS’s capital levels down 7.5 per cent, making it the third biggest faller of 51 lenders tested. Under the conditions, it was left with a capital buffer of 8.1 per cent.