In a speech on the economic and financial implications of the U.K’s vote to leave the EU, BoE’s Governor Mark Carney said he favors a rate cut over the summer, indicating a preference for August over July while leaving the door open to an earlier move.
The governor stressed that the BoE had other options, likely a reference to more QE, although he once again sounded cool on taking interest rates into negative territory.
Mr. Carney noted that members of the FPC could take any steps needed to support the financial system at its meeting Tuesday, and announced that the BoE will continue the longer-term liquidity auctions it launched ahead of the vote until September.
Further out, he said the U.K. does have the capacity to successfully adapt to a future outside the EU, but stressed that it was the responsibility of political leaders to shape that future.
The pound has fallen -150 pips since the beginning of his speech.
The yield on 10-year U.K. government bonds falls to a new low, dropping around -0.02% to +0.918%.
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Dean Popplewell
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