Carney defends BOE’s Brexit scenarios report

Bloomberg

Mark Carney defended the publication of the Bank of England’s Brexit scenarios, telling Parliament that the institution couldn’t hold back its analysis once lawmakers had asked for it.
The BOE had released a report on PM Theresa May’s deal and other Brexit outcomes. Its worst-case scenario for a chaotic exit sees the economy shrinking by 8 percent within a year, property prices plunging almost a third and the pound losing a quarter of its value to below parity with the dollar. The BOE’s scenarios were more extreme than the government’s, and prompted criticism from some lawmakers, who accused Carney of undermining BOE’s credibility.

DISRUPTIVE BREXIT
The extent of Brexit’s disruption to trade and economy will determine how much pound falls, according to Bank of England Deputy Governor Ben Broadbent.
“The greater the economic dislocation, the worse for the exchange rate it’s going to be — there’s a direct relationship,” he told lawmakers on Tuesday. The current level of the pound has priced in a slew of possible Brexit scenarios, from “better” to “worse,” which will determine sterling’s move depending on the eventual outcome, he said. The BOE said in a report last week that the pound could fall as much as 25 percent to below parity with the dollar under a worst-case scenario, under which the UK leaves EU without any divorce or trade deal.