Bank of England Governor Mark Carney is now out on the wires, saying that a global trade war and a no-deal Brexit remain growing possibilities rather than certainties. Below are some key takeaways, per Reuters.
“In some jurisdictions, the impact of uncertainty may warrant a near-term policy response as insurance to maintain the expansion.”
“In UK, tight labour market, inflation at target, prospect of greater clarity on Brexit argues for focus on medium-term inflation dynamics.”
“If Brexit progresses smoothly, limited and gradual interest rate rises would be needed.”
“Market places significant weight on no-deal Brexit and cuts to bank rate.”
“Increasing inconsistency between market projections and smooth Brexit assumption of MPC.”
“Inconsistencies do not mean markets are wrong, but highlights extent interest rates, sterling, asset prices might rise if Brexit deal reached.”
“MPC will explore in August inflation report how to show interest rate, sterling and other asset price sensitivities in event of Brexit deal.”
“MPC will also make a detailed assessment in August of potential implications of global sea change currently underway.”
“Whether trade tensions shipwreck global economy or are tempest in a teacup will have an important influence on UK outlook.”
The GBP/USD pair came under a modest pressure on these comments and was last seen trading at 1.2622, losing 0.13% on the day.
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