Bank of England Rate Stays at 0.50%
CBJ — The Bank of England has kept interest rates unchanged at 0.50%, which came as a big surprise to investors who had expected the first cut in more than seven years with Britain’s economy reeling from last month’s vote to leave the European Union.
The BoE is likely to deliver stimulus in three weeks’ time, possibly as a “package of measures,” once it has assessed how the June 23 referendum decision has affected the economy, the world’s fifth largest.
The quicker-than-expected appointment on Wednesday of Theresa May as Britain’s new prime minister has helped settle nerves in financial markets.
BoE Governor Mark Carney met with Britain’s new finance minister, Philip Hammond on Thursday. Hours after his appointment, Hammond said the government would do whatever was necessary to restore confidence in the economy and suggested a less aggressive approach to bringing down the budget deficit.
Carney sent a clear signal two weeks ago that stimulus was on the way over the summer in an attempt to show the economy was in safe hands even as Britain’s political leadership crumbled after the EU vote.