BOE cuts bank rate to 0.25%
Published: Thursday 04 August 2016
BOE Officials voted 9-0 to cut interest rates to 0.25% the first time since 2009 and a new record low. On the back of this, Sterling plunged and is under pressure so the downward trend could continue. BoE noted that the "outlook for growth in the short-to-medium term has weakened significantly" following the Brexit referendum. The growth forecast for 2016 was left unchanged at 2.0%. Conversely, the growth forecast for 2017 was slashed from 2.3% to 0.8%, the biggest in history.
In Mark Carney’s speech today, he stated that the BOE took these steps due to the dramatic change in economic outlook. He stated that all elements of the stimulus can be intensified, including taking the rate close to zero if needed. The Monetary Policy Committee also included a plan to buy 60 billion pounds of government bonds over the upcoming six months. In the US initial jobless claims came in worse than expected. It came in well below 300k for 74 weeks; the longest since 1973.
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