UK interest rate cut talks: Gold prices soar

The UK will be waiting for the outcome of the Bank of England’s meeting with the Monetary Policy Committee (MPC) on Wednesday hoping for the much expected interest rate cut.

It’s likely that the interest rate will be cut from 5 percent to 4.75 percent according to 45 economists out of 65 who were polled in Reuters last week. Four economists predicted a cut to 4.5 percent.

The announcement will not be made until Thursday noon, although it has been speculated that this might be brought forward after several economist have called on the MPC to announce their decision on the rate sooner.

The Bank of England base rate has been held at 5 percent since April this year, both the British Chamber of Commerce and the CBI have both urged the MPC to cut the by half a percent, after the BCC warned yesterday the UK was already in recession.

As speculation rose around the world that central bank were all ready to cut interest rates, the price of gold soared for the second day in a row, as traders inform investors that the if the rate was cut this would boost demand for gold. Gold shot up $9.45 at $879.05 a troy ounce.

Source: telegraph