BoE official hints at push for stimulus to counter Brexit

Bank’s chief economist and majority of fellow policymakers vote 8-1 to leave rate at 0.5%

Andy Haldane said he will probably push for Bank of England stimulus next month to bolster the UK economy after the nation’s vote to leave the European Union.

Policy easing will likely be required to “protect the economy and jobs from a downturn” caused by uncertainty, the BOE chief economist said, according to the text of a speech delivered in Port Talbot, Wales, on June 30 and updated to reflect his current view. Surveys by the BOE’s regional agents since the referendum indicate a significant number of companies are pausing or reducing hiring and investment plans, while household confidence is falling, he said.

“Given the scale of insurance required, a package of mutually-complementary monetary policy easing measures is likely to be necessary,” Haldane said. “This monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly. By promptly I mean next month, when the precise size and extent of the necessary stimulatory measures can be determined as part of the August Inflation Report round.”

Haldane and the majority of his fellow policymakers voted 8-1 this week to leave the bank’s benchmark rate at a record-low 0.5 per cent at their first meeting since the June referendum. Minutes showed most of them expect monetary policy to be loosened at their August 4 gathering, when officials will have new forecasts and a press conference to explain their decision.

Not enough data

Only Gertjan Vlieghe voted for a 25 basis point cut last week. Haldane was seen as another likely contender to vote for easing, having indicated a preference for loosening in the past, but said officials don’t yet have enough data on how the economy is faring in light of Brexit, and will produce their own analysis next month.

“It is still far too early to be drawing strong conclusions on the precise path of the UK economy,” Haldane said. “At present, we have only the smallest trail of data breadcrumbs on which to base any assessment of how companies and consumers are responding to the referendum news.”

Bloomberg A House of Fraser department store on Oxford Street in London. UK retailers had their worst June in a decade as consumers reined in spending ahead of the European Union referendum, according to figures from accounting firm BDO.