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Carney Says the Bank of England Is Ready to Respond to Brexit
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Loading...Mark Carney said the Bank of England is poised to counter any shock the economy faces from Brexit, deploying interest-rate cuts or even increases to contain a disruptive outcome.“The Monetary Policy Committee will respond to any material change in the outlook, adjusting policy in either direction,” the BOE governor told reporters on Thursday after the bank kept its key rate on hold at 0.75 percent. “There are scenarios where policy would need to be tightened.”
Carney insisted that the most likely outcome remains a negotiated transition, though the approach of the March deadline before the U.K.’s scheduled departure from the European Union “concentrates the mind” of policy makers. The governor warned of the risk of a shock that damages economic output and increases inflationary pressures, while cautioning that directly commentating on the state of negotiations is for the government.
The pound was little changed as he spoke, trading up 1.2 percent at $1.2922 at 1:17 p.m. London time.
Policy makers earlier said their updated forecasts already see a chance that price pressures start intensifying earlier than previously anticipated as wage growth improves. That slightly hawkish bias is tempered by the fact that the forecasts are based on an assumption for a smooth Brexit that may not come to pass. The outlook also doesn’t include the U.K. government’s latest budget, which was announced this week and which is intended to stimulate the economy.
Source: Bloomberg Finance L.P.
Graph: Used with permission of Bloomberg Finance L.P.
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