Business Irish

Friday 30 September 2016

It looks as if the only way is down as BoE meets up

Published 01/08/2016 | 02:30

Bank of England governor Mark Carney. Photo: Bloomberg
Bank of England governor Mark Carney. Photo: Bloomberg

Take Two at the Bank of England means action. That's the conclusion of almost all economists surveyed by Bloomberg, who predict the UK central bank's second decision since Britain's vote to leave the European Union will involve an interest-rate cut.

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Such a move would see Governor Mark Carney delivering on his summer stimulus signal after officials shocked investors by standing pat in July.

The Monetary Policy Committee (MPC) is debating a range of measures amid signs that the economy is slumping.

While Chancellor of the Exchequer Philip Hammond has indicated a willingness to "reset" fiscal policy, he's yet to unveil anything concrete, leaving Mr Carney in the vanguard of Britain's economic response.

"Soft data for confidence, lending and business conditions suggest a near-term stagnation with a high risk of recession," said Kallum Pickering, an economist at Berenberg Bank in London. "If you can send a big signal to markets that as a central bank you will step in to try and prevent any of these really worrying downside risks from materialising, the way to do that is to surprise with a fairly big package."

The BoE will publish its decision at noon in London on Thursday, alongside MPC members' votes and new economic forecasts.

In July, when officials voted 8-1 to keep the benchmark unchanged, the record of the gathering showed "most" of them expected loosening in August. A rate reduction would be the first change in seven years, when officials were in the midst of battling the recession.

Bloomberg

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