At the Treasury Committee BoE Inflation Report hearing, BoE Governor Mark Carney emphasized that a no-deal Brexit is “not a financial crisis round two” where central banks take center stage. Instead, ” this is a real economy shock and therefore central banks have a role but we’re more of a sideshow.” He also added the real issues are going to be in the real economy. They’ll be about “how well the logistics system works, where business confidence is, what access, if any, is there in a true, no-deal transition Brexit.”
Carney acknowledged that “implied volatility in sterling is very high right now, much higher than it is for other major currencies” for “political discussions” with “importance” for the short to medium term outlook. And, “it will continue to be volatile for the next month at least”.
Chief economic Andy Haldane said “notwithstanding the fact that details of the (Brexit) deal remain to be agreed, we are seeing somewhat greater impact on the behavior of companies in particular in the last month or two.” And, “that could make for a somewhat weaker fourth quarter than we saw in the third quarter, and certainly a more volatile path for output I think over the next few months.”
