BoE MPC member Silvanna Tenreyo said the “effect of that Brexit uncertainty on demand has become increasingly evident in recent months”. The effect is most apparent in business as “investment has been falling in the UK at a time when it has been growing in our international peers; business confidence surveys have slumped; hiring intentions have fallen back.”.
There were also signs of impact on households as “housing market is weakening; consumer confidence has deteriorated. This all happened at a time when household real incomes are rising and all else equal, one might normally have expected spending to be rising too.”
On monetary policy in case of disorderly Brexit in a speech. She echoed the view that seems to be the consensus in the MPC now. That is, “a situation where the negative demand effects outweigh those other effects is more likely, which would necessitate a loosening in policy.”
But she also noted reiterated that “the monetary policy response to such a scenario will depend on the balance of these effects on supply, demand and the exchange rate”. And, it is “to envisage other plausible scenarios requiring the opposite response.”
