Carney Sees Brexit Pushing up Inflation

The Bank of England’s Governor Mark Carney said on Monday that Brexit is likely to hamper growth in Britain as it may end up pushing up inflation, and the country will have to take some time to adjust to life outside of Europe.

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shareprices.com - Tuesday, September 19, 2017

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The speech attracted criticism from Brexit supporters, who have already criticised Carney for his stance on the EU, and his warnings that there would be a cost to re-working trade relationships did not go down well. Carney warned that in the short term, weakening ties with Europe would not immediately be offset by trade agreements with other countries, and interest rates would need to rise soon.

Brexit is a unique experience compared to what we have been used to seeing over the last 50 years. This is the first time that many people who are working in finance or government today will have seen de-globalization. Brexit may give us the freedom to form new trade deals, but those deals will take time to build, and Britain needs a plan for dealing with the interim period. Those in favour of Brexit have been quick to point out that there are other things, such as QE, which are having an impact on inflation, and that the Brexit is just one factor in a complex marketplace. The long term benefits of fresh trade agreements could outweigh the bad, but Carney's hawkish stance could be impacting the mood of traders and investors, and in their mind lead to unnecessary rate increases.

 

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