Carney stands by Brexit judgments

Posted on September 7, 2016

Bank of England governor Mark Carney©FT Montage/Rosie Hallam

Bank of England governor Mark Carney

Mark Carney said on Wednesday that the risk of the UK economy falling into a recession had decreased since the EU referendum, as he welcomed the improved economic data that has been published in the past few weeks.

The Bank of England governor sought to take credit for part of the improved economic outlook following the Monetary Policy Committee’s package of stimulus measures in August and the Financial Policy Committee’s earlier actions to stabilise the markets.

    “Subsequent to the actions of the MPC, [the risk of a technical recession] has gone down,” Mr Carney told MPs, adding to previous comments that the BoE’s actions were “already helping to support the adjustment” to the Brexit vote.

    Facing questions that he had exaggerated the risks of Brexit and then overreacted with interest rate cuts and a resumption of quantitative easing to justify what Jacob Rees-Mogg, the Eurosceptic MP, called his “dire warnings”, Mr Carney said he was “serene” about the judgments the BoE had taken before the referendum and comfortable with the steps taken subsequently.

    “This financial system — under guidance from the BoE — sailed though what was a surprise to the vast majority of financial market participants,” the governor said, praising the Bank’s actions in stemming financial market turbulence and preventing sterling falling further than warranted.

    Mr Carney added that the better data of recent weeks had been anticipated by the central bank in its August inflation report and he still expected a slowdown in growth. In broad terms, he said, “growth is running about half as much as it was running before the referendum”.

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