BoE's Carney Readies Stimulus if Needed
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Mark Carney, the newly appointed Bank of England Governor, said that the bank would be ready to add stimulus should expectations of higher interest rates keep investors on the sidelines.
During a speech to investors today, Carney said,
Earlier in August, Carney introduced forward guidance, with the BoE planning to keep its benchmark rate low at 0.5 percent for the next three years. The Bank is looking for unemployment in the U.K. to reach 7 percent from current levels at 7.8 percent. Projections have just a 33 percent chance for U.K. unemployment to hit that mark in mid-2015, while the bank is looking to 2016 before taking action.
Carney has said that any action taken by the Fed in the U.S. should necessarily be a signal that the BoE will also make a move.
In addition, Carney noted that the BoE would relax liquidity rules on banks meeting capital requirements in an effort to spur more lending.
The pound pared some early losses versus the U.S. dollar earlier and is now down just 0.2 percent to $1.5516.
During a speech to investors today, Carney said,
The upward move in market expectations of where bank rate will head in future could, at the margin, feed into the effective financial conditions facing the real economy. If they tighten, and the recovery seems to be falling short of the strong growth we need, we will consider carefully whether, and how best, to stimulate the recovery further.
Earlier in August, Carney introduced forward guidance, with the BoE planning to keep its benchmark rate low at 0.5 percent for the next three years. The Bank is looking for unemployment in the U.K. to reach 7 percent from current levels at 7.8 percent. Projections have just a 33 percent chance for U.K. unemployment to hit that mark in mid-2015, while the bank is looking to 2016 before taking action.
Carney has said that any action taken by the Fed in the U.S. should necessarily be a signal that the BoE will also make a move.
In addition, Carney noted that the BoE would relax liquidity rules on banks meeting capital requirements in an effort to spur more lending.
The pound pared some early losses versus the U.S. dollar earlier and is now down just 0.2 percent to $1.5516.
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