“The BoE on Thursday concludes its first interest rate meeting since Britain voted on 23 June to exit the European Union and subsequent comments by governor Mark Carney that ‘some monetary policy easing will likely be required over the summer”.
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Sterling fell nearly a cent against the US dollar GBP= after the speech, reversing some of the gains made after Thursday’s surprise decision to keep rates on hold.
“This monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly”.
“The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round”, it said in its statement accompanying the decision.
“Although the Monetary Policy Committee (MPC) surprised many by remaining on hold, we still expect an easing of policy in the near future”, Bill Street, head of Investments EMEA at State Street Global Advisors, said in a note.
A number of major banks have predicted it will fall to $1.25 or lower. “This interest rate affects every region, every sector, every company and every individual that uses Bank money”.
“I would rather run the risk of taking a sledgehammer to crack a nut than taking a miniature rock hammer to tunnel my way out of prison – like another Andy, the one in the Shawshank Redemption”, he said, referring to a film about a prison escape.
The National Franchised Dealers Association has responded positively to the Bank of England’s announcement that interest rates will remain unchanged.
Haldane said Britain’s economy could slow materially in the coming quarters, but he did not see a crash.
Carney has previously suggested he does not favor taking rates below zero, because of the potential impact on banks.
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“The lack of clear direction is more likely to add to economic uncertainty and therefore be detrimental to demand and the economy”, said Angus Armstrong, the director of macroeconomics at the National Institute of Economic and Social Research.
