According to BoE Governor Mark Carney, the UK economy is showing signs of strain that may lead to another interest rate cut for the United Kingdom.
Carney said Brexit had initiated a broader picture of ‘economic post-traumatic stress disorder’ throughout the nation.
Carney said that the UK government’s contingency plan is working well so far while considering measures to safeguard financial stability.
He does not deny that the UK’s economic outlook has ‘deteriorated’ due to the huge uncertainty waiting the country in future.
The news of possible lower interest rates had reduced the yields on UK government bonds to record lows. Gilts have been having huge trouble with negative ratings. A gilt maturing in March is now trading at -0.003%. This means that investors pay the government and banks to safeguard their money.
“In my view, and I am not prejudging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,” Carney said in the speech to bankers and business leaders.
“The committee will make an initial assessment on 14 July and a full assessment complete with a new forecast will follow in the August inflation report. In August, we will also discuss further the range of instruments at our disposal.”