Bank of England to cut rates on Thursday to ward off recession: Reuters poll
Britain's vote to leave the European Union means the Bank of England will take borrowing costs to a new low this week as it makes a pre-emptive strike to try to ward off a recession and to reassure markets, a Reuters poll found.
Only last week, the median in a Reuters poll predicted the Monetary Policy Committee would hold Bank Rate at 0.5 percent on Thursday but the latest survey taken on Wednesday points to a 25 basis point cut.
On Tuesday, Bank Governor Mark Carney gave another hint more stimulus was on the way, saying a hit to Britain's economy from last month's referendum could prompt the Bank to act.
"Carney once again signaled that the Bank has the tools to respond to economic developments," said James Knightley at ING.
"That tool box looks set to be re-opened tomorrow; we think the BoE will react to downside economic risks generated by Brexit uncertainty."
Thirty-nine of the 60 economists polled by Reuters on Wednesday said the BoE would chop at least 25 basis points from the 0.5percent Bank Rate has sat at since early 2009 on Thursday.
The median forecast was for a cut to 0.25 percent, with 35 of 60 saying so; two forecast a 50 basis point cut to zero and another two said 40 basis points to 0.10 percent.
Financial markets have almost completely priced in a cut on Thursday.
A July 5 Reuters poll found just 19 of 52 economists predicting any change this week, with the consensus for more easing to come later in the year, yet so much has changed in a very short period of time.
The Bank will re-start its asset purchases later this year - probably in August - topping up the 375 billion pound program it wound up in 2012 with another 50 billion pounds, the poll found. Only seven expected an increase this week.
Britain's Chancellor Hammond says no need for emergency budget
Britain's Chancellor Philip Hammond, said the country did not need an emergency budget and he would instead monitor the economic situation over the summer before setting out spending targets as normal in the autumn.
Crude prices rose on Thursday to recoup some of their big losses from the previous session, but gains are likely to be limited by mounting concerns the global glut in oil is not going away soon after two major agencies issued bearish reports.
Brent crude was up 48 cents at $46.74 a barrel at 0633 GMT. U.S. crude rose 43 cents to $45.18 a barrel.
Reference: Reuters
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