Belfast Telegraph

UK Website Of The Year

Home News UK

Bank of England has 'licence to wade back into EU debate'

Published 16/06/2016

Bank of England governor Mark Carney has already warned about the effect of Brexit on the economy
Bank of England governor Mark Carney has already warned about the effect of Brexit on the economy

The Bank of England could wade back into the Brexit debate today when it announces its latest interest rates decision just a week before Britain's EU referendum.

Governor Mark Carney said recently the rate-setting Monetary Policy Committee (MPC) will not hold back from flagging issues, such as the referendum, which could hamper attempts to hit its inflation target.

He has already sounded the alarm over a British exit, saying it could tip the UK into recession and all eyes will be on minutes of the MPC meeting for further warnings.

Analyst Chris Hare, of Investec, said the Bank will have licence to wade back into the EU debate.

He said: "The Bank of England entered a 'purdah' period from May 28, whose rules forbid civil servants from publishing material relating to the 23 June vote.

"But the Bank does not comprise civil servants and it only follows purdah arrangements on a self-imposed basis, with certain exceptions. The most notable exception, flagged by governor Mark Carney in front of the Treasury Select Committee last month, is the June 16 MPC meeting."

The Bank is expected to vote unanimously to keep rates on hold at 0.5% where they have been since March 2009.

A rate rise now seems firmly off the cards for 2016 at least, and s peculation is mounting over the possibility of a rate cut should Britons vote to leave the EU.

Shaun Port, chief investment officer at online investment management firm Nutmeg, said there was currently a 50% chance of a rate cut this year.

"We expect this to shift to 100% in the event of a Leave vote," he added.

Mr Carney was reportedly sent a letter on Monday by Vote Leave campaign director Bernard Jenkin MP, warning him of the purdah rules he claimed banned "any public comment" from the Bank in the run-up to the referendum.

Mr Jenkin, who is also chairman of the Public Administration Committee, wrote: "You have already made your views known about the question of the forthcoming referendum.

"The concern is that you, as governor of the Bank of England, or others who serve the Bank, may have occasion to make further public comment on matters arising from the question on the ballot paper for the referendum."

But it is understood Mr Carney sent a three-page letter in response, saying Mr Jenkin's letter "demonstrates a fundamental misunderstanding of central bank independence", adding that it is the Bank's "duty" to report its "evidence-based judgments".

Read More

From Belfast Telegraph