UK interest rates could be cut soon, central banker hints

LONDON (AP) — U.K. interest rates could be cut as soon as this month to shore up an economy that's barely growing even as some Brexit uncertainty has dissipated, the Bank of England's outgoing chief hinted Thursday.

Mark Carney said in a speech that there is a “debate” within the bank's rate-setting Monetary Policy Committee “over the relative merits of near term stimulus to reinforce the expected recovery in U.K. growth and inflation."

The bank is predicting an economic pick-up as some of the risks associated with Brexit have disappeared in the wake of last month's election victory by Boris Johnson's Conservatives. His big win has eliminated any near-term fears that Britain would leave the EU without a withdrawal agreement to smooth its exit from the bloc.

“Much hinges on the speed with which domestic confidence returns," Carney said.

And if evidence of a pick-up in growth doesn't materialize soon, he said action could be taken swiftly. He even said it's possible that the bank could restart its monetary stimulus program, which pumps money into the economy.

“There are downside risks from global growth and the possibility that uncertainties over future trading relationships could remain entrenched,” said Carney, who will be replaced in March by a former bank deputy governor, Andrew Bailey.

“If evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response," he added.

The response in financial markets was swift as traders priced in a possible quarter-point reduction in the bank's main interest rate from 0.75% at the next policy meeting - Carney's last one after seven years at the helm - on Jan. 30. The pound has fallen 0.6% to a two-week low of $1.3019.

Recent indicators have not...