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Bank of England cuts interest rates to 0.25% - live updates Bank of England press conference after cutting interest rates - live updates
(35 minutes later)
12.13pm BST 12.49pm BST
12:13 12:49
What will record low interest rates mean to you? Hilary Osborne explains all here: Q: You’re not forecasting a recession next year - is that because of the new stimulus package?
Related: UK interest rate cut: how it will affect you Carney confirms that the Bank expects only limited growth in 2017, but not a recession.
12.12pm BST Today’s package means the Bank has “improved the economic prospects of the country”,and should mean unemployment is lower and growth is stronger than would otherwise be the case.
12:12 12.47pm BST
The Bank of England has also decided to start buying £10bn of corporate bonds (debt issued by UK companies) with newly created money. 12:47
Similar measures are already underway in the eurozone, though the ECB’s QE scheme. Onto questions, starting with the Financial Times...
12.09pm BST Q: You’ve said that monetary policy can only mitigate the impact of Brexit, so what should the government do?
12:09 Carney says that the government has already identified the areas that need to be addressed, such as boosting productivity. Monetary policy cannot tackle structural problems in an economy.
Pound plunges 12.47pm BST
Sterling has slumped by more than 1.5 cents against the US dollar in the last few minutes, to $1.315. 12:47
That suggests that the Bank of England has gone further than traders had expected. 12.45pm BST
Pound drops on the first BoE rate cut since 2009. pic.twitter.com/xMzpGqGPq1 12:45
At presser, @bankofengland's Carney says majority of MPC supports another cut to "lower bound" if economy continues as projected #Brexit
After UK rate cut BoE's Carney hints more to come: "All elements in this package have scope to be increased"
12.44pm BST
12:44
Carney: We could cut rates further
All of the elements in this package can be increased, Mark Carney declares.
Interest rates could be cut further, the £100bn funding for lending scheme could be increased, as could the QE and corporate bond purchase scheme.
And then he reveals that a majority of MPC members would support a further rate cut, if the forecasts in today’s inflation report are accurate.
12.42pm BST
12:42
Carney: We've launched a timely, coherent and comprehensive package
Today’s package of measures are “timely, coherent and comprehensive”, says Mark Carney.
Half of all mortgages are on floating rates, as are four-fifths of bank loans, so the cut in interest rates will be felt immediately.
The Bank of England is also determined that the stimulus gets to the real economy, rather than being diluted through the financial sector.
Carney says the new term funding scheme designed to ensure the base rate cut not diluted as it passes through the financial system
Buying corporate bonds will ease the funding cost of UK companies, he continues.
And buying more government bonds through QE will drive down bond yields, and push investors towards riskier assets (as they’ll get an even smaller return on UK gilts).
UpdatedUpdated
at 12.10pm BST at 12.46pm BST
12.08pm BST 12.40pm BST
12:08 12:40
The BoE has also launched a new programme, worth £100bn, to encourage Britain’s banks to lend to businesses and consumers. The Bank of England is expecting Britain’s unemployment rate to rise to 5.5% by 2018.
That’s another attempt to ward off a recession. Unemployment to rise from 4.9 to 5.5 per cent in next 2 years - Carney.
12.06pm BST This is more than BOE Governor Carney, this is Statesman Carney
12:06 12.37pm BST
The Bank of England has also slashed its growth forecasts, following the UK referendum vote. 12:37
It now expects growth of just 0.8% next year, down from 2.3% in its May forecasts. Mark Carney says the Bank is aiming to “reduce uncertainty, and blunt the slowdown” caused by the Brexit vote.
*BOE KEEPS 2016 GDP FORECAST AT 2%, LOWERS 2017 TO 0.8% V 2.3% But monetary policy has its limits, he warns. And the fall in sterling will not fully offset the “substantially weaker” private sector demand.
12.04pm BST 12.35pm BST
12:04 12:35
It’s official: You can watch Mark Carney’s press conference online here (right-click to open in a new tab).
MPC vote to cut #BankRate to 0.25% and for a package of measures designed to provide additional monetary stimulus pic.twitter.com/vyqHCgYork It’s also being streamed on Sky News and BBC News.
12.03pm BST 12.34pm BST
12:03 12:34
Bank of England boosts QE BoE Press conference begins
The Bank of England has also boosted its quantitative easing programme by £60bn. Governor Mark Carney’s press conference is starting now.
That means it will be buying bonds from banks, with newly created money, in an attempt to stimulate the economy. He begins by touching on the Brexit vote, saying:
12.00pm BST The UK can handle change. It has one of the most flexible economies in the world. It has a deep reserve of human capital.... and its people are admired the world over for their strength under adversity.
12:00 Carney confirms that the Bank has cut interest rates to record lows, boosted its asset purchase scheme by £60bn, decided to start buying up to £10bn of corporate bonds each month, and created a new £100bn funding for lending scheme.
BANK OF ENGLAND INTEREST RATE DECISION He than warns that:
The Bank of England has cut UK interest rates to 0.25% at today’s meeting. The economic outlook has changed markedly.... and are consistent with the risks which the MPC saw before the vote.
That’s a new record low, and shows that the central bank is trying to protect the economy from a downturn by easing monetary policy.
More to follow....
11.57am BST
11:57
Hold onto your hats, folks.... it’s just three minutes until the most eagerly awaited Bank of England policy decision since the financial crisis was raging.
We should get the monetary policy decision at noon sharp, but must wait 30 minutes until Mary Carney’s press conference.
Updated
at 11.57am BST
11.53am BST
11:53
Eight minutes, kids.
11.50am BST
11:50
Jeremy Cook of World First, the currency trading firm, is bracing for action in 10 minutes....
Bottle of whisky has just arrived on desk; someone knows it could be one of those days
11.37am BST
11:37
City experts are still making forecasts, as the clock ticks towards noon.
ABN Amro’s Nick Kounis predicts a £150bn boost to quantitative easing and a quarter-point rate cut:
My expectation for #BoE : (a) GBP 150bn increase in asset purchase target (b) ease conditions in Funding4Lending (c) 25bp Bank Rate cut
But IG’s Chris Beauchamp points out that the Bank of England could surprise us...
Given last month’s distinctly uneventful meeting, plus the range of other options open to Mark Carney and his team, we should be careful before assuming a course of action is pre-determined. Mr Carney, after all, is still known as the ‘unreliable boyfriend’.
11.30am BST
11:30
The pound has now recovered its earlier losses, and is hovering unchanged at $1.333 against the US dollar.
Trader are worrying that the Bank of England may be more ‘hawkish’ than forecast. You can expect sterling to soar if rates are unexpectedly left on hold in 30 minutes....
11.26am BST
11:26
Royal Bank of Canada’s economics team have sent over a useful chart, showing how the financial markets have already priced in an interest rate cut:
SONIA is the overnight interest rate charged on deposits held in sterling. As you can see, the blue line shows how it is expected to drop to just 0.1% by early 2017.