Sunday 11 December 2016

Bank of England eyes fresh rate cut despite rebound

Scott Hamilton

Published 16/09/2016 | 02:30

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

The Bank of England said yesterday it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain's economy was proving less severe than it had predicted only last month.

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The Bank of England said yesterday it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain's economy was proving less severe than it had predicted only last month.

The BoE's rate-setters voted unanimously to keep the Bank Rate at 0.25pc, the lowest level in the BoE's 322-year history, after cutting it in August for the first time since 2009 to tackle the shock of Britain's vote to leave the European Union.

Policymakers also voted 9-0 to keep their government bond-buying target at August's new, higher level of £435bn (€511bn) and to stick with a new plan to buy up to £10bn worth of corporate debt.

August's stimulus was Britain's largest since the global financial crisis.

But since then a string of indicators have rebounded from July's slump, leading some politicians to chide BoE Governor Mark Carney for being alarmist about the Brexit vote.

"A number of indicators of near-term economic activity have been somewhat stronger than expected," the Bbnk said in minutes of the Monetary Policy Committee's September meeting.

Central bank staff estimated the economy will grow by 0.3pc in the July-September period, better than their previous forecast in August of a slowdown to 0.1pc.

Data published earlier yesterday showed retail sales edged down only slightly last month after the strongest July in 14 years. Retailer John Lewis said the EU vote had had little impact but the full effect was not yet clear. (Reuters)

Irish Independent

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