Bank of England (BoE) Deputy Governor Minouche Shafik, at her scheduled speech at Bloomberg Markets Most Influential Summit in London, said that she expected the central bank would need to pump more stimulus into Britain's economy "at some point". BoE's top markets official, said the UK is in the middle of an economic shock brought on by the vote to leave the European Union.
"There is no doubt in my mind that the UK is experiencing a sizeable economic shock in the wake of the referendum," Shafik said in a speech she was due to make on Wednesday.
Shafik noted the possibility of reduced access for British companies to markets in other EU countries once the UK triggers Article 50 and formally leaves the 28-nation bloc. She said the uncertainty about the outcome of the "protracted exit procedure" from the bloc would likely weigh on prospects for business investment and will further hurt growth.
The BoE cut interest rates to a record low of 0.25 percent and announced a range of other stimulus measures in early August. Policy makers have said there’s a chance of another reduction as they assess the potential longer-term fallout from Brexit. BOE next meets to set policy on Nov. 3rd. Forward-looking indicators in UK suggest slowdown may not be as sharp or as sudden as we might have feared. However, it is early to assess the exact impact.
Echoing comments by other central bankers globally, Shafik said fiscal and structural actions by governments, as well as international policy co-ordination, are needed. She said that November rate decision will depend on the data.
Sterling under pressure after Shafik's comments. GBP/USD 0.26 percent lower on the day, at 1.2988. EUR/GBP edged higher from session lows at 0.8589 to retake the 0.86 handle.
