UK: British central bank lowers key rate to record low – Times Online

Six weeks after the vote by the British for the withdrawal from the EU, the central bank has lowered its key interest rate. Since the global economic crisis in March 2009 he had been lying on the historically low level of 0.5 percent. As the Bank of England announced that it now falls to a record low of 0.25 percent.

The move was expected by observers as Fed chief Mark Carney had already announced “monetary easing” for the summer shortly after the referendum in June a. More surprising, however, was the second decision of the central bank. She is expanding its asset purchase program. The targeted total volume will increase from 375 billion to 435 billion pounds. Since the previous total had already been filled, it means that the Fed will now buy back securities.

had as the first response to the withdrawal from the EU vote the Fed already loosened the capital rules for banks. You do not have to set aside more money for bad times now. In early July they had still dispensed rate hikes to await more economic data.

Since then, a number of leading indicators were published in business and consumer sentiment, which are partially broken downright. The unclear prospects, when and under what circumstances eliminated the United Kingdom with the globally important financial center of London from the EU, provide uncertainty for companies and consumers.

So signaled for example, the purchasing managers’ index for manufacturing in July a significant decline in economic activity. Furthermore, managers expect the long boom ends and growth approaching gridlock shortly. According to a survey of the institute IHS Markit below about 1,000 companies the Proposed referendum on United Kingdom membership of the European Union-vote has let the economy crash so keen on the island in July as the beginning of 2009 no longer.

In the service of the indicator is as strong as last like 20 years ago. In addition, it is feared that property massively lose value, especially at the financial center London, which now threatens a significant weakening. Consumer confidence last erupted even as strong as a since 1990 no longer. Even the pound is under pressure. All this obscures the earnings outlook of the company, as well as with British Airways: trips abroad have become significantly more expensive for Britons because their currency is worth less at the resort.