BoE Governor Says Brexit is Inflationary

That reduced "speed limit"-as he has described it-increases the chance of overheating and partly explains why the monetary policy committee (MPC) now says it may need to raise rates soon".

"The balance of these effects has lead overall United Kingdom growth to slow in the first half of 2017, even as growth in the rest of the G-7 was picking up, and United Kingdom growth looks set to remain weaker than the G-7 average until mid-2018", Carney said. However, in the long term, higher levels of immigration did not push down wages or inflation, he said.

"Brexit could therefore ultimately have only a modest impact on prices in general equilibrium".

The BoE governor Mark Carney said that any rise would be "limited and gradual".


The reduction and reorientation of trade is "likely to weigh on productivity for some time", he said, while the actual impact will depend on how quickly any lost access to Europe is replaced by other arrangements.

Mark Carney again warned that slack in the United Kingdom economy is diminishing and that this reduces the UK's tolerance of above-target inflation. This has the potential to limit Britain's ability to trade directly with other countries.

Kristian Rouz - A report published on Monday by a British economics think tank, the Centre for Economics and Business Research (CEBR), says the United Kingdom will be better off next year. Interest rates are likely to be higher as a result, he said.

In remarks prepared for delivery in Washington, Carney said that Britain's planned departure from the European Union in 2019 is already fueling faster inflation in the United Kingdom as weak investment and falling immigration restrain the economy's capacity to expand.


Delivering a major reassessment of the economy just over a year after the referendum, the governor of the Bank of England claimed that the United Kingdom would not be able to grow as fast as it otherwise might and that "the de-integration effects of Brexit can be expected to.be inflationary".

He added that the case for a rate rise is reinforced by rising global interest rates, "meaning that monetary policy has to move in order to stand still".

Threadneedle Street has previously talked up the likelihood of a rate hike only to not follow through.

Inflation and wages in Britain could both be pushed higher in the event of a sharp decline in the number of migrant workers coming to the United Kingdom after Brexit, Bank of England governor Mark Carney said on Monday (18 September).



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