LONDON: The governor of the Bank of England (BOE) vowed to “relentlessly pursue monetary and financial stability” in the wake of British Brexit vote here the other day.
Governor Mark Carney said in a speech entitled ‘Uncertainty, the economy and policy’ at the BOE’s headquarters in the center of the financial district of London: ” The BOE has a plan to achieve our objectives, and by doing so support growth, jobs and wages during a time of considerable uncertainty.”
Carney said part of that plan was “ruthless truth telling”, and that one truth was that there were limits to what the BOE could do, and that monetary policy could not “immediately or fully offset the economic implications of a large, negative shock.”.
Carney added: “The future potential of this economy and its implications for jobs, real wages and wealth are not the gifts of monetary policymakers. These will be driven by much bigger decisions; by bigger plans that are being formulated by others. However, we will relentlessly pursue monetary and financial stability.”
In his speech, Carney also indicated that a cut in the bank rate from its record low of 0.5 percent. where it has been since March 2009, is now a consideration for the Bank’s rate-setting Monetary Policy Committee (MPC).
Carney said: “The economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
He cited heightened uncertainty over economic prospects as a key cause of the deterioration in the economic outlook.
Against a background of heightened uncertainty, households could defer consumption and firms delay investment, which could lower labor demand and lead to a rise in unemployment, said Carney.
He also warned that there was a danger of “adverse spillovers into the global economy” through financial markets and confidence channels.
The MPC next meets on July 14.
