LONDON In an attempt to shield its economy from the negative effects of Brexit and convey confidence to volatile international markets, the Bank of England off yesterday battery unprecedented steps from the global financial crash of 2008.
the body in charge of British monetary architecture cut yesterday its interest rates for the first time since 2009, it reactivated its purchase program bonds and said it would take “all necessary actions” to ensure the stability of the British economy after the country’s decision to leave the European Union (EU).
the Monetary Policy Committee of the bank he warned, however, that he expects the economy to stagnate for the rest of 2016 and to register weak growth over the next year.
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for most Europeans, the output was a bad decision
the bank cut its benchmark financing rate to a record low of 0.25% from 0.5%, in line with market expectations, while new schemes introduced two stimulus: one to acquire 10,000 million pounds (13,000 million dollars) in corporate bonds and another which could reach 100,000 million pounds (130,000 million dollars) – for ensure that banks continue to provide credit after applying cutting interest rates.
the pound fell 1% against the dollar after the announcement, while bond yields British government fell lows and the main stock index in London gained 1%.
the bank expects to cut again this year the benchmark interest rate if the economy throws a weaker than expected developments.
“Following the decision of the UK to leave the EU, the exchange rate has gone down and the outlook for growth in the short to medium term has weakened markedly,” the bank said in its quarterly inflation report.
the governor of the Bank of England, Mark Carney, said the agency took action because the economic outlook had severely changed after the referendum in which the British approved the divorce of the continent.
“by acting early and comprehensively, the Monetary Policy Committee may reduce uncertainty, encourage confidence, stop the slowdown and support the necessary adjustments in the British economy,” Carney said.
“the bank continues prepared to take any measure necessary to achieve its objectives of monetary and financial stability while the UK is adjusted to this new reality and moves toward new opportunities outside the EU, “said Carney.
within the bank there were differences on what kind of measures would include the plan to respond to the effects of Brexit. But there was unanimity in cutting the benchmark interest rate.
Meanwhile, Finance Minister, Philip Hammond, was pleased with the rate cut and said the government and the bank Central had “all the tools necessary to support the economy at the beginning of this new chapter.”
in line with the decision of the Bank of England, British Prime Minister, Theresa May, transmitted yesterday referents the five million small and medium enterprises in the country that his government seeks to support them so they can take advantage of “opportunities” that arise after the Brexit.
“Our SMEs are the backbone of the country (. ..) I want to build an economy that works for everyone, and that means working and listen to smaller companies, “said May.
the referendum on the so-called Brexit was held on June 23 and decision to leave the EU left open many questions for the fifth economy in the world. Some economic surveys conducted later saw signs of a recession, an impact on consumer confidence and a possible drop in investment.
To try to address that scenario, May, who succeeded David Cameron in front British government is planning a campaign to foster reconciliation in the country following the sharp division that originated the Brexit. In the strictly economic sphere, in addition to helping SMEs, May boost industrial policy to prevent the recession a reality.
The prime minister said the vote Brexit shows a deep desire among voters to change the way the economy is headed. For it promised to take measures against tax evasion, boost productivity in business and prioritizing domestic production from foreign companies.
Agencies AFP, EFE and Reuters
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