Ben Broadbent –the Bank of England’s deputy governor – has revealed there could be a further interest rate cut this year if required.
His comments highlight the Bank of England’s signal on Thursday that rates could go lower if the economy worsens.
On Thursday, the Bank cut interest rates from 0.5 per cent to 0.25 per cent- a record low which also marks the first cut since 2009.
Mr Broadbent confirmed there was a real prospect of another cut in rates this year.
He said the Bank had acted after a series of surveys since the referendum on most aspects of the economy, including employment, the housing market and business confidence, which had turned down markedly.
He added that in the past, these had been ‘reliable indicators of subsequent releases of official data’.
The Bank also attempted to boost the economy, with a £100bn scheme to force banks to pass on the low interest rate to households and businesses and the purchase of £60bn of UK government bonds and £10bn of corporate bonds.
These efforts have been criticised in some quarters, including from a former colleague on the Bank’s interest rate-setting Monetary Policy Committee.
Mr Broadbent said: “I’m pretty confident it will have some effect… it is a substantial, coherent package… we have already seen mortgage rates fall.”
The Bank predicted that house prices would fall over the next year, ending years of strong growth. Prices fell in July, according to the latest Halifax figures, out this morning.
The average value of a home fell 1 per cent to £214,678 last month. The drop was the third this year and mostly offset June’s 1.2 per cent increase.
However figures for a single month can be erratic but the quarterly trend shows growth has slowed from earlier in the year.