DB reflect on Governor Mark Carney, his remarks earlier this week. DB with a useful reminder of what the BoE face:
(Carney) emphasised that Brexit is the key risk
- "the degree of uncertainty high"
- disconnect between markets and the BoE's own forecasts
- "Markets are resistant to pricing hikes" … (because there is ) "some possibility to no deal
- Carney … cautioned that "we would do what we could to support the transition to no deal, but there's no guarantee on that."
- pushed back on the view - recently espoused by Boris Johnson among others - that the UK could retreat to the relationship under article 24 of the GATT, which would maintain existing rules while negotiations continue."
- "Carney said such an arrangement would need to be multilaterally agreed and the EU has showed no signs of interest. Boris Johnson said last night that he thought the chances of a no deal Brexit were a "million to one" but that he was prepared for one. He is going to have some tough times squaring this if and when he gets elected!"
