Bank of England meets to weigh up Brexit threat to UK economy
By William Schomberg
LONDON (Reuters) - The Bank of England has kept its main interest rate at 0.5 percent for nearly 90 monthly meetings in a row, but that could change next week when it assesses the economic impact of Britain's historic vote to leave the European Union.
Governor Mark Carney has already signaled that the BoE will cut rates below their already record low levels over the summer and possibly resume its 375 billion-pound bond-buying program.
That could cushion some of the hit from the vote, which has opened up the prospect of years of economic uncertainty as Britain reworks its ties with its main trading partners.
Most economists expect the Bank will wait until August, when it will have a better idea of the state of the economy, before it starts to pump more stimulus into the economy, a Reuters poll showed earlier this week.
But many investors are betting on action sooner than that, putting pressure on the Bank to act when it makes its monthly policy announcement for July at 1100 GMT on Thursday.
Jonathan Loynes, an economist with Capital Economics, said nervousness in markets - following the biggest drop by sterling of any of the world's four major currencies since the 1970s - means the BoE will want to avoid delay.
"We think the (Monetary Policy) Committee will recognize the dangers of disappointing market expectations and cut Bank Rate by 0.25 percent, before re-starting its quantitative easing program in August," he said.
A few economists say the Bank will go further on Thursday. Alan Clarke, at Scotiabank, expects rates will be cut to zero. "What is the point of cutting rates by just 25 basis points? This isn't a fine-tuning operation. Why hold back?" he said. Continued...