In Wednesday afternoon’s inquisition by the Treasury Select Committee, BoE governor Mark Carney firmly defended the Bank of England’s approach to monetary policy in response to the UK’s vote to leave the European Union.
Carney criticised for view on Brexit effects to economy
Carney had warned of the possible adverse effect an exit of the European Union could have on the on the UK economy. Euro-sceptics criticised this opinion for being to pessimistic.
After the Leave-vote became in June, Carney and the BoE decided to cut interest rates and implement further expansionary monetary policy in preparation for possible recessionary pressures.
Amid a cohort of data suggesting that two months after the Brexit vote there are no clear indications for a contraction in UK economic activity, Carney is now under criticism of acting to quick on implementing expansionary measures. However, analysts and expert believe that it is still to early to judge whether Carney’s preparation for a worst-case scenario was misplaced. Long-term effects of the UK’s decision still remain unclear.
In today’s inquisition, Carney defended his policy measures against the MP’s criticism with these arguments.
He also noted that he is prepared to add more stimulus to the economy and lower interest rates further if future data indicate a necessity for such measures.
Pound weakens
The Pound weakened amid the inquisition, dropping 0.43% against the Dollar between 2.10pm and 5.49pm, bringing the GBP/USD to 1.33253
Katharina Fleiner 07/09/2016
