Bank Of England Governor Mark Carney Delivers Speech As Bank Pledges Liquidity

The Bank of England has cut interest rates for the first time since 2009, as it calibrates its response to the Brexit vote.

The BoE also boosted its quantitative easing programme, expanding its bond buying to the corporate debt market.

Key points

  • BoE in 25 bps cut, taking benchmark rates to 0.25 per cent

  • BoE will expand QE with an extra £70bn

  • Bank will also extend QE to buy corporate bonds

  • Mark Carney calls Brexit vote a “regime change”, expects unemployment to rise

  • MPC votes 9-0 for rate cut, 6-3 for QE expansion

 

Britain's Justice Secretary, Michael Gove, delivers his speech after announcing his bid to become Conservative Party leader, in London

The race to be the next prime minister is now in full swing. Michael Gove has launched his campaign to become the next Prime Minister argued that only someone who had campaigned for Brexit should lead the Conservative party; the frontrunner Theresa May campaigned on the Remain side.

Sterling remains lower following Bank of England governor Mark Carney’s comments that the UK was suffering “post-traumatic stress” and the central bank is likely to have to ease policy in the coming months.

As policymakers scramble to respond to the economic shock of the vote to leave, Chancellor George Osborne said that he is dropping his long-held goal of reaching a surplus in the UK’s public finances by the end of the decade.

Key points

  • Michael Gove sets out his bid for Tory party leadership, focus on change and reform

  • Labour leader Jeremy Corbyn could face a leadership challenge

  • George Osborne abandons his 2020 public finance surplus target

  • FTSE 100 enjoys best week since Dec ’11

 

Britain's Home Secretary Theresa May attends a press conference in London

Boris Johnson will not be running to replace David Cameron, but Michael Gove will. He’ll face new favourite home secretary Theresa May – and a handful of others.

Key points

  • Boris Johnson pulls out of the race for Tory party leadership

  • Michael Gove launched surprise run

  • May, Leadsom, Fox and Crabb launch candidacy

  • Bank of England governor hints at more monetary easing, warning of a “materially slower” growth

  • FTSE 100 closes at highest since Aug 2015; Gilt yields fall negative for first time ever

 

EU referendum

The European political establishment has begun formulating its response to the UK’s historic decision to leave the EU, putting on a show of unity at a hastily arranged meeting of foreign ministers in Berlin.

Global markets lose $2tn of value in Friday’s trading – the single biggest one-day loss since 2007 – and are set for further volatility at the start of next week.

Key things to watch

  • “Core Europe” urges Britain to trigger exit talks through Article 50 immediately

  • French foreign minister calls for new UK PM in ‘coming days’

  • Merkel says formal talks should not “take forever”

  • UK commissioner Jonathan Hill resigns from post

  • ECB official: City will lose vital passporting rights outside single market

  • Sturgeon: second Scottish independence referendum process has begun

By Mehreen Khan and David Bond