UK central bank tries to soften shock on economy

Associated Press

LONDON

Britain’s central bank launched a range of stimulus measures Thursday meant to jolt confidence back into an economy shocked by the vote to leave the European Union. Analysts, however, say they may not be enough to halt a slide toward recession.

In a multipronged approach intended to grease the gears of the economy by making borrowing easier and cheaper, the Bank of England cut its key rate to 0.25 percent from a previous record low of 0.5 percent.

It also agreed to pump an additional $79 billion of new money into the economy through the purchase of government bonds. It furthermore said it will buy up to 10 billion pounds of corporate bonds to make it easier for companies to borrow, and announced a program of cheap loans for banks to make sure they can lend to people and businesses at low rates.

“This is the appropriate response to the economic conditions we find ourselves in,” the Bank of England’s governor, Mark Carney, told a news conference.

The measures were somewhat bolder than investors had expected, pushing stocks up and the pound down. Experts say they will help shore up confidence at a time of uncertainty by making borrowing marginally cheaper and showing that authorities are taking action. Since the vote’s outcome, business and consumer activity in Britain has dropped at the fastest pace since the depths of the financial crisis in 2008, according to surveys.

But they are unlikely to address the economy’s fundamental concerns.