United Kingdom central bank unveils stimulus to counter Brexit jitters

It also agreed to pump an additional 60 billion pounds ($79 billion) of new money into the economy through the purchase of government bonds.

The Bank of England deputy governor, Ben Broadbent, has told the BBC’s Today programme there could be a further interest rate cut this year if needed.

USA stocks are mostly higher Thursday as the market continues the small moves it’s made in the last few weeks. European stocks are climbing and the British pound is skidding after the Bank of England moved to shore up the British economy after the nation’s vote to leave the European Union.

The central bank said it projected the economy to stagnate for the remainder of 2016 and suffer weak growth throughout next year, lowering its interest rates for the first time since 2009. The current rate of 0.25 will be the lowest interest rate in the central bank’s 322-year history. South Korea’s Kospi added 0.3 percent to 2,000.03 and Hong Kong’s Hang Seng index gained 0.4 percent to 21,832.23.

The BoE’s easing measures hammered sterling, which fell 1.52% at $1.3120, its largest one-day drop against the dollar in a month.

The Dow Jones industrial average fell 2.95 points, or 0.02 per cent, to 18,352.05, the S&P 500 gained 0.46 points, or 0.02 per cent, to 2,164.25 and the Nasdaq Composite added 6.51 points, or 0.13 per cent, to 5,166.25. “We will also be passing on the reduction to mortgage customers on our Standard Variable Rate, which is already one of the lowest in the market and will reduce from 3.94 percent to 3.69 percent with effect from 1st September”.

The BOE package “snapped a streak of underwhelming action by global central banks recently” and “should keep the pound broadly pressured”, said Omer Esiner of Commonwealth Foreign Exchange. While the pace of hiring and economic growth slowed in the first half of the year, consumers could spend more in the months to come.

In order to mitigate this difficulty, the Bank said, they will be “launching a Term Funding Scheme that will provide funding for banks at interest rates close to the Bank Rate”. The MPC said the costs of trying to bring it back to its 2 percent target in the immediate future would exceed the benefit.

US crude fell 0.9 percent to $41.57 a barrel after surging 2.7 percent overnight. The stock rose $1.35, or 12.9 percent, to $11.79.

Europe’s broad FTSEurofirst 300 index was up 0.69 per cent at 1,331.37.

London’s FTSE 100 index, which had been wobbling beforehand, stormed higher and closed 1.6 per cent higher.

Brent crude, a benchmark for worldwide oil prices, added 1.19 dollars (90p), or 2.8%, to 44.29 dollars (£33.79) a barrel in London.

Further policy loosening in the United Kingdom helped push European shares up 0.6 per cent, while the dollar rose 0.2 per cent against a currency basket, drawing strength from a stronger-than-expected ADP jobs number on Wednesday.

The pound fell to 1.3116 USA dollars from 1.3317 dollars on Wednesday.