Bank of England's Carney reiterates Brexit risks
The Bank of England's Governor Mark Carney reiterated the risks of a Brexit, despite criticism.
Tory MP Jacob Rees-Mogg claims the Bank of England "fundamentally undermines" its independence by forecasting the potential impact of a Brexit on the economy. The Bank of England warned in May's inflation report that the referendum on Britain's European Union membership is the "most significant risk" to the British economy, with governor Mark Carney saying that risks "could possibly include a technical recession." In a tetchy exchange at the Treasury Select Committee session on Tuesday, Rees-Mogg told Governor Mark Carney: "By getting involved in the details of something that is more important than a general election, that fundamentally undermines the standing of the Bank of England and it's appearance of independence." Rees-Mogg argued that it is highly unusual for the Bank of England to take a view on the impact of the EU membership referendum, given that it does not forecast the impact of Labour or Tory policies in the run-up to a general election. An exasperated Carney replied: "What you've missed is that we are dealing with is something that will have a prospective impact on our ability to discharge our remit. We are obliged — it is political to ignore it.
Focus on Carney intensified earlier this month when the BOE published its quarterly Inflation Report, which included the strongest warning yet that a vote to leave the EU would harm the economy. The unprecedented intervention drew a barrage of comments, with Prime Minister David Cameron saying the central bank was right to warn about the potential outcomes, while pro-Brexit campaigners such as Energy Minister Andrea Leadsom accused Carney of overreaching his mandate and provoking financial instability.
Reuters notes:
Prime Minister David Cameron and finance minister George Osborne are leading the campaign to keep the country in the EU. Rees-Mogg has previously accused Carney of venturing into politics with his Brexit warnings and called for him to resign. But Andrew Tyrie, chairman of the committee quizzing Carney and other BoE officials on Tuesday, said lawmakers would have criticized the governor if he had stayed silent on Brexit. Carney said he did not expect the central bank to make substantial fresh comments about the risks of Britain leaving the EU before the referendum next month. The Bank is due to make a monthly policy statement on June 16, a week before the in-out vote.
