Bank of England Members Mention Rate Cut

GBP

The Bank of England might need to cut interest rates to almost zero after a no-deal Brexit, while repeated Brexit delays could also make a rate cut necessary, senior Bank of England official Gertjan Vlieghe said on Friday.

Vlieghe’s comments, in a speech in London, went further than those of other Bank of England policymakers who have said rates would probably need to fall after a no-deal Brexit shock to the economy, but have not been explicit about the size of such a move.

The prospect of Britain leaving the European Union without a deal has grown after both candidates to become Britain’s next Prime Minister said they would be prepared to lead the country into a no-deal Brexit if necessary.

That tension has grown recently due to increased concerns about a no-deal Brexit, as well as a slowdown in the global economy, which has prompted other major central banks such as the Federal Reserve and the European Central Bank to signal that they are ready to pump more stimulus into their economies.

Bank of England Governor, Mark Carney, warned last week that Britain was facing higher risks from Brexit and increased protectionism, prompting investors to put a 50-50 chance of a BoE rate cut before Carney’s term ends in just over six months’ time.

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