Bank of England likely to help economy after no-deal Brexit

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Bank of England (BoE) Governor Mark Carney said on Tuesday the BoE would probably give more support to the economy if it suffers the shock of a no-deal Brexit, but that the options available to the British central bank would be limited.

The BoE has previously stressed that it would not have an automatic interest rate response to Britain leaving the European Union (EU) without a transition deal, which is due to happen in just over a month's time.

But Carney said the chances of the BoE loosening or tightening monetary policy were not equal.

"Given the exceptional circumstance associated with Brexit, I would expect the committee to provide whatever monetary support it can," he said in an annual report to lawmakers.

Bank of England Governor Mark Carney. /VCG Photo

The BoE has raised rates only twice since the global financial crisis, due to a slow recovery and more recent Brexit uncertainty hanging over the economy, and its benchmark lending rate stands at 0.75 percent, close to the historic low of 0.25 percent.

Prime Minister Theresa May is still trying to find a deal with the EU that can bridge the divide within her Conservative Party, little more than a month before the scheduled Brexit date of March 29.

The BoE said on Tuesday it would increase the frequency of its liquidity operations to weekly from monthly in the weeks around March 29, as it did at the time of the 2016 Brexit referendum in order to keep the financial system working.

"This is a prudent and precautionary step," the BoE said.

Source(s): Reuters