Good news may be on the way for savers now though, as, for the first time in nearly 10 years, the monetary policy committee (MPC) had a split decision of 5-3 in favour of leaving interest rates as they are when the vote was made on whether to increase interest rates last week. It was believed the MPC would vote 7-1 to maintain the rate at its post-Brexit referendum level of 0.25%.
Members of the Committee, Ian McCafferty and Michael Saunders joined outgoing rate rise advocate Kristin Forbes in supporting an increase back to the post-crisis level of 0.5%. It was the closest the MPC has come to supporting a rise since 2007 because it currently has only eight members following Charlotte Hogg’s departure in March.
In the minutes of the rate-setting meeting, the Bank said it now expected inflation to exceed 3% by the autumn – higher than it had forecast a month ago – having reached an annual rate of 2.9% in May.
This announcement had an immediate effect on the Pound/Euro rate. The levels were dropping alarmingly low again to the 1.1 level but this announcement saw the rate rise immediately back to 1.4. This is very positive for the Pound as it would indicate that it would become stronger should the interest rates go up, which in turn could provide Expat retirees with some welcome extra cash in their pockets on two fronts (better exchange rate and better interest rates).
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Located at the Southern tip of the Iberian Peninsula, the British overseas territory of Gibraltar looks South over the confluence of the Mediterranean Sea and the Atlantic Ocean. This small but strategically important isthmus of land, is home to over 32,000 people in just 6.7 km2 (2.6 miles2) of land. As a British crown dependency, the laws and language are those of the United Kingdom, but Spanish is also widely spoken along with the hybridised form of the two known as Llanito. Due to its location and close links with the UK, Gibraltar has long been a favoured destination by British expats looking for sunnier climes and an attractive tax regime. Although it’s not quite as well-known as some other offshore territories such as Monaco and the Cayman Islands, Gibraltar tax rates make it a very attractive choice for anyone looking to relocate within easy striking distance of the UK and Western Europe.
At the moment, no one can say with complete certainty what will happen in the near future regarding Brexit and pensions.