Carney press conference after BoE remains on hold
- Recent Brexit deal creates a possibility of a pick up in UK growth
- World risks slipping into low growth, low inflation but many of these dynamics occurred first in the UK
- Both reduced Brexit uncertainty and stronger world economy assumed in BoE forecasts, but neither is assured
- Now evidence that households are doing precautionary saving before Brexit
- Brexit uncertainties are weighing particularly heavily on business investment
- Reduced chance of a no -deal Brexit has pushed up sterling
- Brexit agreement reduces risk of no deal significantly
- pick up in UK growth likely to be limited by a lack of supply capacity in the economy
- New BoE Brexit assumptions assume transition occurs over 3 years vs previous much longer transition.
- UK growth in future years is helped by fiscal policy. stronger world and reduced uncertainty.
- Fiscal policy is an upside risk to UK Growth outlook
- If downside risks emerge to UK economy there may be a need to provide reinforcements , but this is not pre-committing
- As more details of post-Brexit trade talks emerge, BoE will adjust its forecasts.
- will do what is necessary to ensure there is an appropriate hand off to my successor
- Need to distinguish between Jan 31 Brexit deadline and when new trading arrangements take effect
GBPUSD pushing down towards 1.2800, but that level is holding for now.