"The Bank of England has a duty to try and stabilise the resulting economic shock."
At a Treasury Select Committee hearing this morning, Carney said: “What we have said in the event that there is no deal that the response would not be automatic. It would depend on demand and supply and where the exchange rate went.
“Some of us, myself included, have said that it is not equally weighted. So it’s more likely that we would provide some stimulus. We would do what we could to support the transition in the event of a no-deal but there are no guarantees on that.”
Monetary Policy Committee member, Gertjan Vlieghe, predicted earlier this year that the Committee would choose to ease monetary policy in the event of a no-deal Brexit.
He said: “in the case of a no-deal scenario I judge that an easing or an extended pause in monetary policy is more likely to be the appropriate policy response than a tightening.”
Joshua Roberts, associate director at JCRA, commented: “Carney’s comments are hardly a revelation for the market, which has been judging a rate cut as more likely than a hike for over a month. The logic is inescapable: if the flow of goods and services between the UK and its most important trading partner is severely disrupted, the Bank of England has a duty to try and stabilise the resulting economic shock.”
