BOE’s Carney: Monetary Policy Easing Likely Over The Summer

“In my view, and I am not pre-judging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer”, he added.

Bank of England officials held talks with the chief executives of some of the UK’s biggest banks about the effect of last week’s vote by the British public to leave the European Union.

The pound fell more than one per cent to US$1.32.

‘In August, we will also discuss further the range of instruments at our disposal, ‘ Carney said.

“All this uncertainty has contributed to a form of economic post-traumatic stress disorder among households and businesses, as well as in financial markets”, Carney said.

Further out, he said the United Kingdom does have the capacity to successfully adapt to a future outside the European Union, but stressed that it was the responsibility of political leaders to shape that future.

But Boris Johnson, who is now considered the front-runner to become Britain’s next prime minister after steering the Leave campaign to victory, used his first comments since the vote to heap praise on the Canadian.

By this he means an interest rate cut and also possibly quantitative easing – where the Bank of England introduces new money electronically to buy financial assets, like Government bonds. ‘As we have seen elsewhere, if interest rates are too low (or negative), the hit to bank profitability could perversely reduce credit availability or even increase its overall price’.

Ms Leadsom in May said the forecasts were “incredibly dangerous”, adding: “As an ex-Goldman Sachs banker Carney knew exactly what he was doing”.

He said: “The result of the referendum is clear but its implications are not”.

“With the Leave vote creating greater uncertainty over the outlook for the economy and BoE policies biased towards further easing/renewed QE, sterling is vulnerable to further near-term selling pressure”, said Athanasios Vamvakidis, FX strategist at BAML. “As a backstop, in order to support market functioning, the Bank of England continues to stand ready to provide more than £250bn of additional funds through its normal facilities”. “The relationship between uncertainty and big economic decisions is something we can calibrate and we have the advantage of being able to anticipate the outcome of the referendum”.

“There will be an adjustment in our economy because of the decision that the British people have taken”, Mr Osborne said.

Carney and his fellow BoE policymakers will not have much hard data on how Britain’s economy has responded to the referendum jolt when they meet next month.

More meaningful surveys of the country’s manufacturing, construction and service sectors, covering the month of July, will only be published in early August.