British policy rate cut – Dagens Industri

The key interest rate is lowered to 0.25 per cent from 0.5 per cent of a united central bank. A full 50 of the 52 analysts in the Bloomberg survey expected a decrease, of which 47 expected it to reach 25 points, according to Direct.

While expanded goal for the purchase of UK government bonds 435 billion pounds, equivalent to 4923 billion, from the previous 375 billion pounds. The central bank initiates also the purchase of UK corporate bonds for up to 113 billion.

Three of the Executive Board nine members voted against increased purchases of British government bonds, while two voted against to start buying corporate bonds.

the package included including a new financing tool. A so-called “Term Funding Scheme” (TFS) will enhance the effect of the lower rate, by offering banks financing at an interest rate close to the policy rate. Thus one should support further lending to the real economy.

The growth forecast at 2.0 percent for this year remains unchanged, but the forecasts for the next two years is reduced for the third time this year.

Next year now growth is projected at 0.8 percent, down from 2.3 percent in May, and the forecast for 2018 revised down to 1.8 percent, from the previous 2.3 percent.

Even the perception of inflation have been adjusted. This year it is predicted to be 0.8 percent, up from the expected 0.4 percent in May, and the next two years forecast an inflation rate of 1.9 and 2.4 percent respectively. In May, the forecasts of 1.5 and 2.1 percent.

The Bank of England adds that a majority of its members expect to stand behind another rate cut this year on future statistics come in reasonably in line with today’s report. It would involve a reduction in the interest rate effective lower limit, but the central bank points out that this is currently assessed to be “close to, but slightly above zero.”

During his press conference emphasized Mark Carney that the level is above zero. The top central bank also noted that he “is not a fan of negative interest rates”, and that there are other options available.