The Bank of England cuts interest rates, because it is afraid of Brexitu. Pound down firmly – Wyborcza.biz

The Bank of England decided to first rate cut since March 2009. Then the world is still raging crisis. For over seven years the main rate reached 0.5 percent. On Thursday, it has been reduced to 0.25 per cent. And this reduction may not finish. Its decision the central bank explains, of course, the June referendum, in which the British were in favor of leaving the European Union.

British economy waiting slowing

“After the vote to leave the EU pound weakened and growth prospects in the short and medium term significantly weakened,” – reads the Bank of England. The weaker pound will increase inflation. According to the Bank of England in 2017. Instead of the expected so far inflation at 1.5 per cent., It will reach 1.9 per cent., And a year later instead of 2.1 would be at the level of 2.4 percent.

the Bank of England expects a significant weakening of economic growth – in 2017. instead of 2.3 percent. expected in the May forecasts, UK GDP is expected to grow barely 0.8 percent. Weaker growth may contribute to the growth of unemployment. By lowering interest rates, the Bank of England hopes that businesses and consumers will take more loans and will increase thanks to investments or consumption.

170 billion pounds to boost growth

the Bank of England also decided to extend the program of buying government bonds from the market by another 60 billion pounds (ie. quantitative easing), which means that in total, since the beginning of the crisis of 2008 -09 British central bank wpompuje thus the economy 435 billion pounds. Collection of Treasury securities is firstly, to reduce their profitability, and secondly, to ensure greater availability of cheap money in the market to enable banks to lend more cheap loans.

Another 10 billion pounds of Bank of England will be spent on the purchase of corporate bonds.

on the other hand, 100 billion pounds will be spent on a new program of cheap loans to support commercial banks in an environment of low interest rates. “Interest rates are close to zero, so it may be difficult for some banks to further reduce rates on deposits, which in turn may limit their ability to cut interest rates on loans,” – that explains the new program of the Bank of England.

” Britain will give advice “

” the vote to leave the EU resulted in a period of uncertainty, followed by a period of adjustment until the shape of our new relationship with the EU will the clear “- said in a statement the British Chancellor of the Exchequer Philip Hammond. “It is good that monetary policy is used to support the economy during the period of adjustment” – he added.

– Great Britain will cope with the changes. He has one of the most flexible economies in the world – said at a press conference the head of the Bank of England, Mark Carney. – The Bank of England is ready to do everything necessary to achieve the goal of financial stability at a time when the United Kingdom will was adapting to new realities – said Carney.

pound down

the decision of the Bank of England caused a strong depreciation of the pound. Before her British currency has cost about 1.33 dollars. It weakened to just over 1.31 dollars. Zloty strengthened against the pound to the strongest level since June 2014. Following the decision of the Bank of England pound cost even less than 5,07 zł.