More Brexit pain seen for pound; Bank of England to cut rates: Reuters poll
By Ross Finley and William Schomberg
LONDON (Reuters) - The Bank of England will probably wait until August to make any policy move to offset the hit to the economy from Britain's decision to leave the European Union, but the pound has more pain ahead, a Reuters polls showed on Tuesday.
Governor Mark Carney has said the economy faces a material slowdown after the shock referendum result and the BoE took steps on Tuesday to encourage banks keep lending.
One Reuters poll showed sterling - which sank to a new 31-year low against the dollar on Tuesday - would probably weaken by a further 3 percent on top of the 12 percent drop already since the June 23 vote, less than two weeks ago.
Reuters polls before the referendum predicted a significant slide in sterling as well as the kind of economic pain that the BoE is bracing for with its abrupt shift in stance.
After spending most of first three years at the Bank trying to signal when the BoE was likely to raise rates, Carney last week suggested more stimulus was likely over the summer as the referendum result raised fears of a possible recession.
But it is debatable how much impact an additional cut to rates, which are already at a record low of 0.50 percent, will have on an economy facing lower investment, spending and potential trouble in Britain's expensive property markets.
"In our view, a rate cut in the coming months would be largely futile, however it does appear a very real possibility," said Oliver Jones, an economist at Fathom Consulting.
"The Monetary Policy Committee also seems likely to restart quantitative easing, with a possible expansion of the scope. Purchasing corporate bonds would be the most effective of the Bank's options." Continued...