Treating the hangover: The Bank of England cuts rates for the first time in seven years

Posted: August 4, 2016 in economy
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Treating the hangover

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The bank acts to limit economic damage from Brexit

THE Bank of England had not changed base rates in seven years, but when it finally moved, it did so with a bang. In response to the low growth it expects in the wake of Brexit, it cut rates by a quarter point, to 0.25%, expanded its quantitative easing scheme and introduced a new funding scheme for banks. The move came on August 4th—three prime ministers, two disappointing European football championships and one referendum since the last wiggle in the rate.

The cut, when it finally came, was fully expected by markets and indeed looked overdue. In the days immediately after the Brexit vote, Mark Carney, the governor of the bank, hinted that the MPC would be ready to respond aggressively to the presumed economic blowback. Yet at its July meeting the MPC held fast while awaiting more data. The news since has been almost uniformly bad. Manufacturing, service-sector and construction …

via Economic Crisis


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