LONDON (Reuters) – The Bank of England kept interest rates steady on Thursday and hinted at slightly faster future rate rises if Brexit goes smoothly, but warned all bets were off if next March brought a “disruptive” EU departure.
Below are comments from Bank of England Governor Mark Carney and other Monetary Policy Committee members:
Carney on no-deal Brexit:
“There would be a hit to supply, potentially fairly large and certainly more rapid than one is accustomed to in an advanced economy.”
Carney on economic adjustments:
“UK fiscal policy is shifting from a descriptive to a more accommodative stance.”
“The UK economy is in the process of adjusting to a new and as yet uncertain economic relationship with the EU, as has been the case since the referendum.”
Carney on Brexit volatility:
“As has been the case since the referendum, the MPC’s forecasts are conditioned on the assumption of a smooth transition to the average of a range of potential Brexit outcomes.
“As the deadline for concluding the Withdrawal Agreement approaches, the expectations of households and businesses are diverging somewhat from this base case assumption.
“In general, households are more sanguine, while businesses are more wary. These shifting expectations could lead to some greater-than-usual short-term volatility in the data.”
Carney on consumption:
“Momentum in household consumption appears to be greater than previously thought. UK households remain resilient to a Brexit that has not yet happened.”
Carney on investment levels:
“As the Brexit deadline looms, UK companies are now understandably postponing investment until they have greater clarity over the UK’s future trading relationship with the EU.”
Carney on economic outlook
“The economic outlook depends significantly on the nature of EU withdrawal, in particular: the form of new trading arrangements between the EU and UK; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond. Whatever happens, monetary policy will act to ensure price stability, and subject to that, provide support for the economy during the transition.”