Central Banks

Bank of England could cut rates further, MPC member McCafferty says

Bank of England rate-setter says more cuts are on the way

The Bank of England (BOE) could cut rates further and boost bond purchases if the economic downturn in the U.K. deepens, a rate-setter at the central bank said Tuesday.

Last week, the BOE slashed its benchmark interest rate to a record low of 0.25 percent, announced an increase in government bond purchases, and lowered its economic growth forecast as the U.K.'s vote to leave the European Union (EU) increased uncertainties.

"If the economy proves to have turned down in line with the initial survey signals, I believe that more easing is likely to be required, but that can easily be delivered in coming months," Ian McCafferty, an external member of the BOE's Monetary Policy Committee wrote in an Op-Ed for the Times of London newspaper.

"Bank rate can be cut further, closer to zero, and quantitative easing can be stepped up," McCafferty said, but added that he would advocate a more cautious stance until there was more clarity over the economic situation.

McCafferty noted that there was limited information on how the Brexit referendum has influenced the economy, with most of the initial assessment derived from surveys.

"Our current forecast is surrounded by a much higher degree of uncertainty than normal," he wrote.

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