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US and Canada cut interest rates again – the UK may follow

The US Federal Reserve has cut its national interest rate to between 0% and 0.25%, a 1% rate cut.

Meanwhile the Bank of Canada has cut its interest rate by 0.50% to 0.75% – and there is speculation it could be cut the rate a third time.

The current Bank of England base rate is 0.25% following a 0.50% cut last week – though there is speculation that new Governor Andrew Bailey could oversee them being cut again this month to 0.10%.

Paul Dales, chief UK economist at Capital Economics, said: “We know that a big economic hit is coming, but can only speculate about its size and duration.

“For what it’s worth, we think a short-term hit to GDP of around 2.5% is possible.

“While we think (hope) that a financial crisis, which would deepen and lengthen that hit, will be avoided, we do think the Bank of England will have to do more by cutting interest rates by a further 15bps to 0.10% and restarting quantitative easing.”