| Series Title | EurActiv |
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| Series Details | 04.08.16 |
| Publication Date | 04/08/2016 |
| Content Type | News |
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At its meeting on the 3 August 2016 the Bank of England’s Monetary Policy Committee (MPC) voted for a package of measures designed to provide additional support to growth in the United Kingdom and to achieve a sustainable return of inflation to the target. The package comprised: a 25 basis point cut in Bank Rate to 0.25%; a new Term Funding Scheme to reinforce the pass-through of the cut in Bank Rate; the purchase of up to £10 billion of UK corporate bonds; and an expansion of the asset purchase scheme for UK government bonds of £60 billion, taking the total stock of these asset purchases to £435 billion. Following the United Kingdom’s vote to leave the European Union in June 2016, the exchange rate had fallen and the outlook for growth in the short to medium term had weakened markedly. The fall in sterling was likely to push up on CPI inflation in the near term, hastening its return to the 2% target and probably causing it to rise above the target in the latter part of the MPC’s forecast period, before the exchange rate effect dissipates thereafter. In the real economy, although the weaker medium-term outlook for activity largely reflected a downward revision to the economy’s supply capacity, near-term weakness in demand is likely to open up a margin of spare capacity, including an eventual rise in unemployment. Consistent with this, recent surveys of business activity, confidence and optimism suggested that the United Kingdom was likely to see little growth in GDP in the second half of 2016. The Bank of England reduced its growth prediction for 2017 from the 2.3% it was expecting in May 2016 to 0.8%. |
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| Source Link | Link to Main Source http://www.euractiv.com/section/euro-finance/news/bank-of-england-cuts-rates-to-record-low-after-brexit-vote/ |
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| Countries / Regions | United Kingdom |
