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Bank of England interest rate cut coming, just not now

The Bank of England surprised markets Thursday by keeping interest rates on hold, but it gave the clearest possible signal that it will act next month to tackle an economic slowdown triggered by the Brexit vote.

The bank was widely expected to cut rates to a new record low after consumer and business confidence slumped in the wake of the vote to leave the European Union on June 23.

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And while it kept rates unchanged at 0.50%, the bank said most members of its policy committee “expect monetary policy to be loosened in August.”

“The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round,” it added.

Related: UK housing market freezing up (and lower prices coming)

Governor Mark Carney had already flagged that the bank was getting ready to stimulate the economy. “In my view … the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer,” he said on June 30.

Britain’s vote to leave the EU shocked markets around the world. The pound collapsed to its lowest level in 31 years and has stayed under pressure ever since.

London’s FTSE 100 stock index was up 0.8% ahead of the bank’s announcement, hitting a fresh 11-month high. It slid back into negative territory after the bank held rates.

The pound also got a boost, shooting up to almost $1.35, before returning to around $1.33. That’s still nearly 12% below the levels it hit on the day of the referendum.

Related: Investors will shun Europe’s ‘golden visas’ after Brexit

Many big banks, economic forecasters and rating agencies have already slashed their forecasts for growth in the U.K. following the vote to leave.

Even Philip Hammond, Britain’s new Treasury chief, admitted on Thursday the vote for Brexit has caused “at least a temporary loss of confidence in the business community.” He said that was having a “chilling effect” on the economy.

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Bank of England interest rate cut coming, just not now Reviewed by on . The Bank of England surprised markets Thursday by keeping interest rates on hold, but it gave the clearest possible signal that it will act next month to tackle The Bank of England surprised markets Thursday by keeping interest rates on hold, but it gave the clearest possible signal that it will act next month to tackle Rating:
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