Tuesday 24 April 2018

Carney hints at more moves to shore up British economy

Governor of the Bank of England Mark Carney gives evidence to the Commons Treasury Committee
Governor of the Bank of England Mark Carney gives evidence to the Commons Treasury Committee

David Milliken and Ana Nicolaci da Costa

Bank of England governor Mark Carney said yesterday that a hit to Britain's economy from the vote to leave the European Union could prompt the bank to act, hinting again that more fiscal stimulus is on the way.

"If the outlook has worsened, to use that term, in the judgment of the MPC [Monetary Policy Committee] there always could be monetary response if that is consistent with its remit," Mr Carney told politicians in Westminster.

Mr Carney and his fellow members of the Bank's Monetary Policy Committee, who have previously warned of a material hit to Britain's economy from a Brexit vote, are meeting this week, meaning they are not supposed to talk about the outlook for interest rates in detail.

The bank is due to announce whether it has cut rates or taken other action tomorrow.

Mr Carney has previously given a more explicit signal that the BoE will act to cushion the impact of the vote.

A week after the June 23 referendum, he said he expected the bank to pump more stimulus into the economy over the summer.

Sterling, which hit a one-week high against the US dollar earlier yesterday buoyed by the quicker-than-expected appointment of a new British prime minister, added to its gains as Mr Carney and other BoE officials spoke yesterday.

Investors expect the BoE to cut interest rates below their already record low of 0.5pc as soon as tomorrow.

However, many economists think the bank might wait until August 4 when it will have a better sense of the impact of the "leave" decision.

Mark Carney also said yesterday that some criticism of the BoE for its decision to spell out the economic risks of leaving the EU, had been "extraordinary in all senses of the word".

He denied being influenced by Chancellor of the Exchequer George Osborne, one of the leaders of the "remain" campaign. And Mr Carney said he did not decide in advance what position the bank's most important policy-making committees should take on the vote.

"I did not prejudge the line of those policy committees, nor could I. That's not the way the system works, that is not the way the system is set up," he said.

Before the referendum, the bank said a Brexit vote could cause a material slowdown in the economy, with a chance of a recession. That angered some leading "leave" supporters. One pro-Brexit politician called on Mr Carney to resign although senior "leave" campaigners quickly sought to defuse the tensions after the vote. (Reuters)

Irish Independent

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