Bank of England thinks impact of Brexit is pretty bad

The short-term impact [of Brexit], however, has been largely negative. In the weeks since the vote, the pound has fallen sharply, and stocks in a number of sectors, including banking and construction, have been under pressure. Several real estate funds suspended withdrawals as investors tried to pull out their cash, fearing a slowdown in the British property market. Surveys in recent weeks also indicated that consumer confidence, services output and purchasing-manager sentiment had plummeted. The International Monetary Fund has cut its growth forecast for Britain’s economy, which had been one of the region’s strongest since the financial crisis. “There is a clear case for stimulus, and stimulus now, in order to be there when the economy really needs it — to have an effect when the economy really needs it,” Mark J. Carney, the bank’s governor, said at a news conference on Thursday. The central bank’s Monetary Policy Committee voted unanimously to lower its benchmark interest rate to 0.25 percent, the lowest level in the bank’s 322 years. The rate had been at 0.5 percent since March 2009. Mr. Carney also signaled on Thursday that the committee could cut rates further this year, but he ruled out the possibility of negative interest rates.

Source: Bank of England Cuts Interest Rate to Historic Low, Citing Economic Pressures – The New York Times

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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