Mark Carney says Bank of England can't protect country from economic pain
The governor of the Bank of England warns that while the central bank is likely to act to help the economy, it will not on its own be able to protect Britain from economic pain.
Highlighting the uncertainties caused the vote to leave the European Union, Mark Carney said in a speech Friday in London that "monetary policy cannot immediately or fully offset the economic implications of a large, negative shock."
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He said the bank "has identified the clouds on the horizon" and is likely to offer more monetary policy over the summer. But "one uncomfortable truth is that there are limits to what the Bank of England can do."
That could mean a cut to the benchmark interest rate, which is now at a record low of 0.5 per cent, or the injection of more money into the financial system.
Central bankers have increasingly called on governments to take more action to help their economies to create jobs and improve living standards.
The pound fell sharply on news that more monetary stimulus, which tends to weigh on a currency, is likely. It was down to $1.3295 US from $1.3429 US before Carney's comments.
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Carney said that the Bank of England's policymakers will assess the situation at their meeting July 14. They will prepare new economic forecasts and in August "we will also discuss further the range of instruments at our disposal."