The Bank of England will likely have to provide further stimulus to the U.K. economy to limit an economic slowdown caused by voters' decision to leave the European Union, Deputy Governor Minouche Shafik said Wednesday.

The BOE has already responded to the June vote to exit from the EU by lowering its key interest rate, restarting a program of bond purchases, and providing loans to banks.

But policy makers have also indicated they expect to do more to moderate an anticipated weakening of the economy, and Ms. Shafik made it clear she supports that view.

"It seems likely to me that further monetary stimulus will be required at some point in order to help ensure that a slowdown in economic activity doesn't turn into something more pernicious," she said in a speech in London.

Recent economic data has been mixed, with a series of surveys suggesting the world's fifth-biggest economy may be bouncing back from the initial post-referendum slump.

Ms. Shafik acknowledged there has been "little data on which to base an assessment of how the outlook had changed," but said it is clear that the economy will grow more slowly over coming years.

"There is no doubt in my mind that the U.K. is experiencing a sizable economic shock in the wake of the referendum," said Ms. Shafik, who will leave the BOE in February to run the London School of Economics. "Any reduction in openness or need to reallocate resources will necessarily imply a slower rate of potential growth for the economy."

Whatever the longer-term implications of the vote, Ms. Shafik said the slowdown hasn't been as "sharp or sudden" as policy makers had feared, and additional stimulus may not be required as soon as they had previously anticipated.

"The likely timing of that stimulus will depend on the continued evolution of the data over the coming weeks and months," she said. "We will learn a lot from the arrival of more official data for the post-referendum period, and that will allow us to navigate by looking out the window as well as down at our radar."

Write to Paul Hannon at paul.hannon@wsj.com

 

(END) Dow Jones Newswires

September 28, 2016 05:45 ET (09:45 GMT)

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