THE pound fell sharply after the Governor of the Bank of England warned interest rates could be cut to a new record low within weeks to bolster the economy.
They have been pegged at 0.5 per cent for the past seven years, hitting savers hard but helping people with mortgages.
READ MORE: A tale of two markets as FTSE finds its feet
Mark Carney,who last week said £250 billion of liquidity was available for the money markets, added yesterday that “some monetary policy easing will likely be required” signalling a rate cut next month or in August.
He also hinted the Bank could pump more cash into the economy under its quantitative easing programme and said the financial policy committee could take action when it meets next Tuesday.
The pound fell by more than one per cent on the news.
READ MORE: A tale of two markets as FTSE finds its feet
Mr Carney said Britain was grappling with “economic post-traumatic stress disorder” following the Brexit vote. The final call will be made by the monetary policy committee during its inflation report in two week’s time.
He said: “In my view, and I am not pre-judging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely to be required over the summer.”
Mr Carney said the Bank would take further action to ease uncertainty by providing “additional flexibility” in its provision of liquidity insurance.
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