STAFF NEWS & ANALYSIS
Golden Opportunity: Post Brexit, Banks Around the World Ponder Opening the Money Taps
By Daily Bell Staff – June 29, 2016
Brexit — how will central banks respond? Policymakers’ existing struggle with low productivity and high debt has become more complicated –Financial Times
This article provides us with a useful survey of what central banks are going to be doing to confront the Brexet-initiated downturn.
Start with the Bank of England. Governor Mark Carney acted quickly to provide liquidity by injecting £3.1bn into banks just after Brexit.
Nonetheless, the pound dropped hugely and UK equities plunged too. The next possible step is a rate cut but the falling pound has already initiated price inflation and a rate cut would add inflationary pressures.
Depending on what the numbers show, the BOE could not only cut rates, it could re-initiated quantitative easing.