Carney Says BOE Discussing No-Deal Brexit Powers With Treasury
Mark Carney said the Bank of England is in discussions with the U.K. Treasury about the powers it needs to smooth any financial ructions if the country leaves the European Union without a deal.
The BOE governor, who stressed that market movements suggest a no-deal Brexit is unlikely, spoke to lawmakers hours before Prime Minister Theresa May faces a no-confidence vote in Parliament. She suffered a landslide defeat on Tuesday over her transition agreement with the EU. While she’s expected to survive the motion, the next steps in the Brexit process are unclear.
-Carney reiterated his confidence that the U.K.’s financial system is resilient, but said the powers the BOE needs should be put in place before the March 29 deadline.
-He said that of the powers needed, the majority have been granted, with a few remaining outstanding that are particularly relevant winding up firms.
-The governor said he wouldn’t put too much weight on short-term fluctuations, but market moves since the Parliamentary vote, including a rebound in the pound, seem to reflect views that the prospect of a no-deal departure has diminished.
-Carney and his BOE colleagues were testifying about the central bank’s November Financial Stability Report. In stress tests, the BOE passed all of the U.K.’s seven largest lenders, saying they’re strong enough to continue extending credit even during a no-deal Brexit that could send the economy into a tailspin.
-As the governor spoke, economic data was published showing inflation fell to its lowest rate in almost two years in December as the cost of filling up a vehicle plunged. Consumer prices rose 2.1 per cent from a year earlier, the least since January 2017, the Office for National Statistics said. The BOE’s target is 2 per cent.