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Carney defends BoE against critics furious at Brexit remark

epa05301843 Bank of England Governor Mark Carney (C) arrives for the Bank of England's quarterly Inflation report in London, Britain, 12 May 2016. Carney said that in the event of the UK voting to leave the EU this would have a negative impact on the UK economy and may further weaken the pound.  EPA/ANDY RAIN

 

Bloomberg

Mark Carney defended the Bank of England against political critics furious at his warnings about the dangers posed by a European Union exit, and described the British economy as facing similar uncertainty to the early 1990s.
“We’re taking a judgment as a committee, and we’re changing policy because of it, we’re putting out billions of pounds of liquidity facilities, we’re getting banks to raise capital as we did a few years ago against these types of risk,” the governor said on the BBC’s “Andrew Marr” show. “If we’re potentially going to alter the path of interest rates or other instruments of monetary policy because of certain things manifested, we have a duty to explain that to the British people and to Parliament.”
Carney responded after campaigners to leave the EU attacked the Bank of England’s comments, including his remark last week that a so-called Brexit might trigger a recession in the UK Former Chancellor of the Exchequer Norman Lamont said afterward that the governor “should be careful that he doesn’t cause a crisis” and Jacob Rees-Mogg, a lawmaker on Parliament’s Treasury committee, told Sky News that he “should be fired.”
‘Incredibly Dangerous’
“It was an incredibly dangerous intervention,” Energy Minister Andrea Leadsom, who favors an exit, told Marr. BOE officials “are not there to promote financial instability, and that’s what they’ve done,” she said.
Iain Duncan Smith, the former work and pensions secretary who is campaigning to leave the EU, piled in on the BBC’s Sunday Politics show, saying that the governor should explain to the Treasury Committee why he hasn’t presented both sides of the matter.
Carney, who spoke after Leadsom, said that it is part of his role to explain the dangers posed on a two- to three-year horizon—as opposed to the long-term, which is “not our mandate to make.”
Chancellor of the Exchequer George Osborne, who favors Britain remaining in the EU, spoke out on Twitter in support of Carney.

‘In Denial’
“Those telling voters EU exit will have no impact on economy are in denial,” Osborne said.
The BOE’s judgments “are carefully considered, and those judgments only reflect our remits, our mandates, the issues we have to deliver,” Carney said. “The bank’s comments on these issues have been in the context of testimony to the House of Lords, testimony to the Commons committees, and inflation reports and associated press conferences around those reports, so it’s in our daily business.”
Marr asked Carney about levels of household debt in the economy and suggested a comparison to the early 1990s, when Britain struggled to shake off a recession as the housing market crashed.
“I lived here at that time, and I remember it very well,” Carney said. “I remember that the levels of uncertainty in the early 1990s are the same as the levels of uncertainty today in this economy which is one of the reasons why the economy is slowing right here.”

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