It seems that Britain can’t keep out of the news lately. The Bank of England cut rates for the first time in nearly eight years from 0.50% to 0.25% and signaled that another possible rate cut could 

come in the near future, perhaps even before the end of 2016. The Bank stated its economic forecast for the U.K. economy is sluggish and announced it is expecting 2016 growth to come in closer to 0.8% from a previous 2.3%. The rate cut and lower expectations for the economy is the first major pillar to fall since the Brexit decision last June. The pullout indicates the U.K. economy won’t like the Brexit very much at all. What does that mean for investors here in the United States?

It may not mean very much at all but if our own GDP numbers were revised downward to 0.8% for the first quarter of this year and 1.2% for the second, those numbers are awfully close to U.K.’s data. It’s interesting to note where we were about a year ago and where we are today. One year ago, the economy appeared to have gained its footing and the Fed agreed with a rate increase at the end of last year. Since then, the economy, while growing, still seems to be finding its ground. Is there a possibility the Fed will reverse course and rescind the 0.25% rate bump it made last December?

It’s possible but highly unlikely. Britain’s scenario is completely different in terms of economic clout. In 1973, Britain joined the European Union. That’s 43 years being part of the EU. Now flying solo so to speak, trade agreements with foreign countries will have to be revisited and with less clout than as a partner in the EU. That’s quite a change and markets will take time to digest the impact. Here at home, let’s not expect any rate cut but the possibility of another rate increase might be further into the future than originally thought.