Following a very poor month of sterling data, including CPI and manufacturing figures the Bank of England took the much-anticipated move of cutting UK interest rates by 25 basis points in order to absorb the shocks being seen post BREXIT.
The cut was accompanied by a two-tranche investment scheme totalling £100bn with the objective of making banks ensure the low interest rates are offered to both retail and business clients.
These schemes were additionally complemented by a £70 BN bond-buying program, which will be utilised to purchase government and corporate bonds over the next six months.
The announced interest rate cut is the first since 2009 and saw sterling lose around 1.6 % against the USD and around 1.51 % against the €. The FTSE is the main benefactor.
Mr Carney highlighted there was the possibility of further interest rate cuts if the UK’s economic data continued to miss expectations.
He highlighted that banks would be expected to offer the basic rates to their clients reiterating:
“the MPC is determined that the stimulus the economy needs does not get diluted as it passes through the financial system.”
In line with new post-referendum expectations the UK’s growth prediction for was revised from May announcement of 2.3% to 0.8%.