October 25, 2016

Bank of England’s Carney, under fresh fire, defends message on Brexit risk

Governor of the Bank of England Mark Carney delivers his monthly inflation report at the Bank of England in the City of London

Bank of England Governor Mark Carney defended the central bank’s decision to flag the risks of leaving the European Union on Tuesday, hitting back at one of his toughest critics who has called for him to resign.

Carney said the outcome of the June 23 referendum could require the Bank to make a big reassessment to how it sets interest rates, something it needed to explain to businesses and households.

“It’s important not just for those in financial markets to understand that, but it’s important also to (be) straight with the British people about that,” he said.

The BoE has angered campaigners who want Britain to leave the EU by talking of the risk of a sharp slowdown in economic growth and a rise in inflation. Carney said earlier this month there was a risk of a two-quarter recession.

Jacob Rees-Mogg, a Eurosceptic lawmaker, renewed his attacks on Carney, calling the BoE a “creature of the government”.

Prime Minister David Cameron and finance minister George Osborne are leading the campaign to keep the country in the EU.

Rees-Mogg has previously accused Carney of venturing into politics with his Brexit warnings and called for him to resign.

But Andrew Tyrie, chairman of the committee quizzing Carney and other BoE officials on Tuesday, said lawmakers would have criticised the governor if he had stayed silent on Brexit.

Carney said he did not expect the central bank to make substantial fresh comments about the risks of Britain leaving the EU before the referendum next month.

The Bank is due to make a monthly policy statement on June 16, a week before the in-out vote.

Speaking to members of parliament on Tuesday, Carney said he thought the Bank’s nine monetary policymakers had largely said what they had to say on the issue.

“We in my judgement have highlighted the key economic issues around, including short-term uncertainty and the potential change in the trade-off between output and inflation, so I would not expect something substantially different to be said (on June 16),” he said.

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