BoE active plan to mitigate effects of Brexit – Diario El País

In a strategy which he described as a “hammer blow stimulus,” the Bank of England (BoE, for its acronym in English) cut its benchmark interest rate by 25 points based on 0.25% and announced it would buy 60,000 million pounds (US $ 79,000 million) in government bonds with new money over the next six months.

the agency also launched two new schemes stimuli : one to acquire 10,000 million pounds in corporate bonds with investment grade and another – which could reach 100,000 million pounds – to ensure that banks continue to provide credit after applying cutting interest rates

most members of the Monetary Policy Committee (MPC) of the BoE also expect cut again this year, the benchmark rate “close to, but slightly above zero” if the British economy shows a weaker performance expected .

“by acting early and comprehensively, the MPC may reduce uncertainty, encourage confidence, stop the slowdown and support the necessary adjustments in the British economy,” he told reporters BoE governor Mark Carney, after the announcement.

the pound was down 1.2% against the dollar, while yields on British government bonds fell to record lows and the main stock index gained nearly London 2%.

Carney said the central bank launched “an exceptional package” of measures that the economic outlook had markedly changed UK after the referendum on the “Brexit. The BoE expects the economy to stagnate for the rest of 2016 and that economic growth will remain weak next year. No projected a recession.

Not all measures were unanimous.

The British finance minister, Philip Hammond, was pleased with the rate cut and said the government and the central bank had “all the tools necessary to support the economy at the beginning of this new chapter.”

the authorities of MPC they were not fully agree on how to respond to the effects of “Brexit”. Cutting the benchmark interest rate and as it seeks to shore up the banks to break through consumer benefits – known as Scheme Funding Newspaper (TFS) – obtained unanimous support

But three members. panel – Kristin Forbes, Ian McCafferty and Martin Weale – they opposed the decision – finally approved – to raise the limit of purchases of government bonds to a total amount of 435.000 million pounds, from 375,000 million pounds which it reached at the end of 2012.

Forbes also opposed to purchases of corporate debt, a measure taken by the BoE for a short period after the financial crisis, but it offers more benefits to the financial market growth economic itself.