Comments by BOE governor, Mark Carney
- UK economic growth has slowed below its potential
- Global economy risks being trapped in a cycle of low rates, reducing policy space
- MPC members are debating the merits of near-term stimulus
- Limited space to cut bank rate would favour a relatively prompt response if evidence builds that weakness in activity could persist
- Early indicators since the election suggest that there has been some reduction in Brexit-related and domestic policy uncertainties
- Says that BOE has equivalent of 250 bps of policy space and that QE, forward guidance and rate cuts are all still part of its policy tools
On the balance of things, he is leaning a bit more dovish but isn't really talking about any potential firm policy decisions that the central bank will undertake. The full text of his speech can be found here.
I think the part on limited policy space stands out the most for me. It means that if there is a bit of a significant fallout in the UK economy, the BOE will have to take preventive action again to insure against things getting out of hand.
The pound is taking a further fall here from Carney's comments with cable easing to a session low of 1.3035 now. The 1.3000 level will be the next key area of support to watch.
