Classifieds 50% off, use promo code FBkpkPromo The Phuket News Kata Rocks The Phuket News Outrigger Koh Samui Beach Resort
The Phuket News Business News
The Phuket News Phuket | Thailand | World | Business | Q&A | Weird World XML, RSS, Feed
The Phuket News The Phuket News
The Phuket News

Bank of England cuts interest rate to record low

ENGLAND: The Bank of England on Thursday (Aug 4) slashed interest rates to a record low 0.25 per cent and announced a vast stimulus package to combat economic fallout from Britain’s looming EU exit.

economics,


AFP

Friday 5 August 2016, 10:13AM


Bank of England policymakers voted unanimously to reduce its key interest rate by a quarter-point from 0.50 per cent. Photo: AFP
Bank of England policymakers voted unanimously to reduce its key interest rate by a quarter-point from 0.50 per cent. Photo: AFP

Policymakers voted unanimously to reduce rates by a quarter-point, the bank said in a statement after its latest meeting, cutting borrowing costs for the first time in more than seven years.

The BoE expects to trim rates again later this year to just above zero, it signalled in a statement after its monetary policy meeting.

The central bank also delivered a £170-billion (B7.785 trillion) stimulus package, which it added could be expanded further.

And in gloomy news, the institution axed economic forecasts for 2017 and 2018 following the June 23 Brexit referendum – in its biggest GDP forecast downgrade on record.

As part of the stimulus package, the BoE’s Monetary Policy Committee also agreed to re-activate its quantitative easing (QE) bond-buying scheme, lifting it by £60 billion to £435 billion in the first increase since 2012.

Thursday meanwhile marked the first rate reduction since March 2009, when the bank cut to the previous historic low of 0.5% – and launched the radical QE policy to stimulate lending and growth during the global financial crisis.

Unusual’ situation

“It’s an unusual situation, it is a very large identifiable supply shock,” said BoE governor Mark Carney, in reference to the economic impact of Britain's EU departure, which is not expected for at least two years.

“The economic outlook has changed markedly… and (this is) consistent with the risks which the MPC saw before the vote.

“We’re living through a time of considerable uncertainty.”

The BoE will also buy £10 billion of corporate debt, while it also unveiled a new scheme worth up to £100 billion to encourage banks to lend to households and businesses. That took the total stimulus to as much as £170 billion.

“At its meeting… the MPC voted for a package of measures designed to provide additional support to growth and to achieve a sustainable return of inflation to the (2%) target,” the bank said.

Stocks up, pound down

Thursday’s news sent London's FTSE 100 shares index 1.6% higher by close, while sterling dived against the dollar and the euro.

BIS

“Today’s announcement represents a significant policy loosening and underlines the bank’s commitment to do all it can to support economic and financial market confidence,” said Adam Chester, head of economics at Lloyds Bank Commercial Banking.

Michael Hewson, Chief Market Analyst CMC Markets UK, said Carney had “wielded the sledgehammer”, while Scotiabank praised the policy measures as “effective”, but added “that GDP growth could still disappoint.”

Barclays, meanwhile, said that the low interest rates would be passed onto consumers, promising a mortgage rate cut of 0.25%.

The BoE maintained its 2% economic growth forecast for 2016.

However, it slashed the growth outlook to 0.8% in 2017 and 1.8% in 2018. That compared with prior predictions of 2.3% for both 2017 and 2018.

“Following the United Kingdom’s vote to leave the European Union, the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly,” the bank said.

And it warned: “Recent surveys of business activity, confidence and optimism suggest that the United Kingdom is likely to see little growth in GDP in the second half of this year.”

New British finance minister Philip Hammond welcomed the BoE announcement.

Support for post-Brexit economy

“The vote to leave the EU has created a period of uncertainty, which will be followed by a period of adjustment as the shape of our new relationship with the EU becomes clear and the economy responds to that,” Hammond said.

“It’s right that monetary policy is used to support the economy through this period of adjustment.”

Conservative Prime Minister Theresa May has already indicated London will not be rushed into EU exit talks – and will most likely will begin the negotiations early next year.

The BoE had flagged last month that it would likely cut rates in August in response to the Brexit vote, which had sent markets tumbling and the pound slumping in its aftermath.

 

 

The Phuket News
The Phuket News
Comment on this story
* Please login to comment. If you do not have an account please register below by simply entering a username, password and email address. You can still leave your comment below at the same time.
Comments Here:
Username:
Password:
E-mail:
Security:
    Forget your password?

Be the first to comment.

The Phuket News
The Phuket News The Phuket News The Phuket News
The Phuket News
Share this
The Phuket News
Have a news tip-off? Click here
The Phuket News
Related stories
The Phuket News
Phuket community

Recent Comments


Phuket officials exasperated over dumping in Karon

How about remote controlled CCTV Cams, directed on the spots, from high elevation in trees or light masts? Zoom in on the culprits, catch them, 2000 ...(Read More)


‘I was framed,’ school chief swears

Jor12,the misreading/not understanding was regarding Kurts comment.I absolutely agree with your opinion....(Read More)


‘I was framed,’ school chief swears

Jor12, the article also states "The case first drew the attention of the media after one parent circulated a video clip allegedly showing the sch...(Read More)


Phuket officials to patrol Rawai pier to check for begging sea gypsy kids

Jor12... Collusion:secret or illegal cooperation or conspiracy in order to deceive others. Once again, not the correct usage, and I did NOT say coll...(Read More)


‘I was framed,’ school chief swears

eagle...no, it says nothing at all about the Director, only a denial and being a well organised plot. "The director WAS SAID to have had his depu...(Read More)


Tons of rubbish cleared in Phuket airport beach clean-up

Paully44...merely commented on your illogical post. Don't know how you arrive at your conclusion. If you have any evidence you should be doing som...(Read More)


Phuket officials to patrol Rawai pier to check for begging sea gypsy kids

Rorii..there is no evidence of collusion by parents. However, if there is, it lends further credence to my analysis of the kids being entrepreneurial ...(Read More)


Fears for thousands of tower block residents after London inferno

Let's hope that Thai Government also looks into cladding ( outer coverings) of high rise buildings. It will give peace of mind when the thai Gove...(Read More)


Phuket officials to patrol Rawai pier to check for begging sea gypsy kids

Sounds noble. Could it be though that these officially non-thai citizens / children... are not sharing a cut of thier earnings with..... Aaaaah. ...(Read More)


Tons of rubbish cleared in Phuket airport beach clean-up

Kurt; I'm well aware of the antics but have to correct him. Jor 12; your assertion that is must be a foreigner whom can't read the Thai langua...(Read More)

The Phuket News
Bangkok Hospital Phuket
PHUKET NEWS
Phuket
Thailand
World
Business
Q A
Weird World
ARCHIVE
POLL
CURRENCY
WEATHER
PHUKET TIDE TABLE
The Phuket News PHUKET LIFE
Phuket Arts
Phuket Community
Phuket Culture
Phuket Dining
Phuket Education
Phuket Entertainment
Phuket Environment
Phuket Health
Phuket People
Phuket Technology
Phuket Travel
Photo Galleries
COLOURING BOOK
The Phuket News PHUKET SPORT
Phuket
Thailand
World
SURF REPORT
PREDICTIONS
The Phuket News PHUKET CLASSIFIEDS
Phuket Buy and Sell
Phuket Jobs
Phuket Property
Phuket Cars and Boats
Phuket Community
Phuket Services
SEARCH CLASSIFIEDS
POST CLASSIFIED
The Phuket News The Phuket News PHUKET EVENTS
Phuket Event listings
Phuket Event calendar
Buy Tickets
POST EVENT
The Phuket News PHUKET DIRECTORY
Phuket Bars, pubs and clubs
Phuket Hotels and villas
Phuket Restaurants
Phuket Yellow Pages
POST LISTING
The Phuket News BARGAINS
The Phuket News ABOUT US
The Company
Distribution points
Subscribe
Advertise with us
Pay for advert
Contact us
CONTESTS
Content Google Map
Site map
Australian Visa Services
 
Currency - The Phuket News   Weather Report - The Phuket News   Surf Report - The Phuket News
LinkedIn - The Phuket News   Twitter - The Phuket News   YouTube - The Phuket News   Facebook - The Phuket News
Copyright © 2017 Class Act Media. All rights reserved. | Website usage terms and conditions | Privacy and Confidentiality Statement.