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Category: Business, Economics and Finance / Economic Trends / Markets / Referendums / World Politics

Brexit has created 'economic PTSD', Bank of England says

Friday, 1 Jul 2016 07:13:01 | Peter Ryan

The Bank of England's governor said Britain's economic outlook has deteriorated. (Adrian Dennis: AFP)

The Brexit shock has created a type of "economic post traumatic stress disorder" for households and businesses, according to Bank of England governor Mark Carney.

A week after the surprise referendum outcome sparked turmoil on global financial markets, Mr Carney signalled Britain's central bank could cut interest rates within months to shield the British economy.

"It now seems plausible that uncertainty could remain elevated for some time," Mr Carney said in a televised address.

"The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer."

External Link: Peter Ryan analyses Mark Carney's comments

Mr Carney repeated he would not hesitate to act to safeguard the British economy after assurances following the Brexit vote that he was standing by to pump up to 250 billion pounds of stimulus into the financial system.

The Bank of England will now also consider liquidity interventions on a weekly rather than monthly basis along with a "host of other measures".

Britain's official interest rate is sitting at an emergency level of 0.5 per cent with the Bank of England board's next meeting due for July 14.

Mr Carney's assurances follow steep falls on global markets in the wake of the Brexit vote and a plunge in the value of the British pound against the US dollar to the lowest level since 1985.

The comments follow a day of chaos in British politics after Boris Johnson pulled out of contention to replace David Cameron as British Prime Minister.

Amid predictions that Britain could fall into a recession as a result of the Brexit vote, Mr Carney highlighted the stress in British businesses and households.

"Will inflation remain under control, will the financial system do its job, will I keep mine?" Mr Carney said.

"All this uncertainty has contributed to a form of economic post traumatic stress disorder amongst households and businesses and in financial markets."

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