BoE governor ‘serene’ about Brexit warnings

Bank of England Gov. Mark Carney said he was “absolutely serene” about the way the central bank warned of a possible Brexit hit to Britain’s economy, before voters decided in June to leave the European Union.

“I am absolutely serene about the ... judgments made both by the MPC and the FPC,” Carney told lawmakers, referring to the Bank’s monetary and financial policy committees.
Carney came under criticism from supporters of Brexit in the run-up to the referendum, and after it, for saying the economy would face a material slowdown, and possibly a recession, in the event of an “Out” vote.
Data has suggested Britain’s economy did not suffer the kind of devastating post-Brexit vote hit forecast by some supporters of the Remain campaign, but economists say it is heading for a slowdown.
Carney fended off criticism from some lawmakers that the Bank moved too aggressively to help Britain’s economy through the Brexit vote shock in early August when it cut interest rates, expanded its bond-buying program and took other measures to ease lending.
“(I) absolutely feel comfortable with the decision I supported and the committee took in August to supply monetary policy stimulus,” he said.
Carney said the bank had expected the main sectors of Britain’s economy to bounce back after the initial impact of the referendum in July, as shown in a series of purchasing managers indexes published in recent days.
The BoE said in August that most of its policymakers expected to cut interest rates further below their record low level of 0.25 percent later this year, if the economy slowed as it expected.
Deputy Gov. Jon Cunliffe said on Wednesday he expected to vote for another rate cut in 2016 if the economy evolves as the Bank forecast last month. 
Official data showed that British manufacturing output fell in July at the fastest pace in a year, confirming earlier signs that factories took an immediate hit after the vote to leave the European Union.
Overall industrial output unexpectedly rose thanks to strong oil and gas production, boosting the chances that Britain’s economy, while slowing, will avoid a recession.
But sterling slipped after the figures which the Bank of England will see as consistent with its view that the economy is likely to slow sharply in the second half of 2016. BoE Governor Mark Carney is due to speak to lawmakers at 1315 GMT.
Manufacturing output fell by a sharper-than-expected 0.9 percent in July following a 0.2 percent drop in June, the Office for National Statistics said.
The official figures are the first to cover economic output solely for the period after the June 23 Brexit vote. Britain was plunged into political chaos in July by the referendum result before Theresa May took over as prime minister.
“We maintain our view that UK industrial production and manufacturing remain a cause for concern,” said economists Andrzej Szczepaniak and Fabrice Montagne at Barclays.
A deep-seated lack of competitiveness in British manufacturing would be aggravated by doubts about the country’s future trading ties if the government delays starting the formal process of leaving the EU, they said.
May has said she will not start the process this year to give Britain time to prepare its exit strategy but she has also said it would not be “kicked into the long grass.”

Source: Arab News