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Bank of England governor denies being politically biased over Brexit - live updates Bank of England governor denies being politically biased over Brexit - live updates
(35 minutes later)
12.44pm BST
12:44
Back in the committee room, Scottish Nationalist MP George Kerevan asks about the Banks medium-term view of the UK economy.
Mark Carney says that growth has slowed from the high days of 2013, when GDP was expanding by around 3% per year.
Now, though, it has dropped to around 1%.
Stripping out the referendum effect.... the bigger picture is that growth will move in line with supply growth, which is weaker than it was. So once the uncertainty effect of the Brexit vote fades, the Bank expects growth to return to around 2.25%, Mark Carney concludes.
12.35pm BST
12:35
Watch Carney vs Rees-Mogg here
Get a sponge and a towel, folks -- here’s the moment when the gloves came off between Mark Carney and Jacob Rees-Mogg.
Watch the moment Mark Carney clashed with #Brexit campaigner Jacob Rees-Mogg over neutrality https://t.co/Udkxg3F0oC https://t.co/6f3cLqUHLm
Bloomberg’s Jill Ward sums it up:
Mark Carney displayed flashes of anger at his chief pro-Brexit tormentor on Parliament’s Treasury Committee in his most robust defense yet of the Bank of England’s comments on the European Union vote.
It “may be inconvenient, but by our actions, and comments, we have made it more likely that we’ll bring inflation back to target, whatever the outcome of the referendum, sooner and more sustainably,” the governor told Jacob Rees-Mogg, the lawmaker who called this month for him to be fired. “That’s our contribution to a better economic outcome for the British people, and for you to suggest otherwise is to try and undermine that.”
More highlights earlier in this blog....
12.27pm BST
12:27
The committee turns to the issue of Britain’s current account deficit.
Mark Carney says there would be a ‘necessary’ rebalancing of sterling (a fall, basically), if Britain chose to leave the EU.
And that would have an import on exporters, meaning the domestic sector would increase relative to the export sector (ie, Britain would sell less overseas, at least for a while).
However, Carney insists that talk of a “sterling crisis” is overdone.
12.23pm BST
12:23
Today’s Telegraph cartoon will amuse those who take government Brexit warnings with lashings of salt.
pic.twitter.com/Cx9FtqV4P0
Updated
at 12.24pm BST
12.21pm BST
12:21
The committee then turn to the weapons available to the Bank to stimulate the economy.
MPC member Gertjan Vleighe says he believes another round of quantitative easing (buying bonds from banks with newly created money) would still be effective. And there is still room to cut bank rate.
Jacob Rees-Mogg then gets up and leaves the room, with a polite nod to the witnesses. Committee chairman Andrew Tyrie then hops up and follows him...... #curious....
12.07pm BST12.07pm BST
12:0712:07
Carney denies being influenced by Goldman SachsCarney denies being influenced by Goldman Sachs
Steve Baker MP then leaves Mark Carney briefly speechless, by asking him to refute the suggestion that Goldman Sachs have pushed him into the Brexit debate.Steve Baker MP then leaves Mark Carney briefly speechless, by asking him to refute the suggestion that Goldman Sachs have pushed him into the Brexit debate.
Baker tells the Bank governor that he is asking ‘in the spirit of goodwill’ (!!)....Baker tells the Bank governor that he is asking ‘in the spirit of goodwill’ (!!)....
We know that Goldman Sachs has been a donor to the Remain campaign, you are a former managing director of Goldman Sachs.We know that Goldman Sachs has been a donor to the Remain campaign, you are a former managing director of Goldman Sachs.
Can I just give you the opportunity to refute any suggestion that Goldman Sachs may have put pressure on you to take a view?Can I just give you the opportunity to refute any suggestion that Goldman Sachs may have put pressure on you to take a view?
“Wow....”, replies Carney, seemingly at a loss for words.“Wow....”, replies Carney, seemingly at a loss for words.
Baker: It’s not an allegation - it’s an opportunity to refute it.Baker: It’s not an allegation - it’s an opportunity to refute it.
Carney refutes it with gusto:Carney refutes it with gusto:
Yes, I refute it categorically... and am stunned to ever have it raised.Yes, I refute it categorically... and am stunned to ever have it raised.
That’s a pretty remarkable jibe at the credibility of one of the world’s top central bankers -- but one which conspiracy theorists will like to hear aired....That’s a pretty remarkable jibe at the credibility of one of the world’s top central bankers -- but one which conspiracy theorists will like to hear aired....
.@SteveBakerHW "Can I give you the opportunity to refute claim Goldman Sachs put pressure on you?"Mark Carney: "Wow. I am stunned.".@SteveBakerHW "Can I give you the opportunity to refute claim Goldman Sachs put pressure on you?"Mark Carney: "Wow. I am stunned."
UpdatedUpdated
at 12.08pm BSTat 12.08pm BST
11.58am BST11.58am BST
11:5811:58
Q: Why do the Bank’s latest graphs show uncertainty over UK assets falling, just as the EU referendum reaches its height, asks Steve Baker.Q: Why do the Bank’s latest graphs show uncertainty over UK assets falling, just as the EU referendum reaches its height, asks Steve Baker.
Policymaker Martin Weale suggests that it is tracking the support for the Remain campaign.Policymaker Martin Weale suggests that it is tracking the support for the Remain campaign.
11.55am BST11.55am BST
11:5511:55
Steve Baker then turns to the Bank’s [not unblemished] track record on forecastingSteve Baker then turns to the Bank’s [not unblemished] track record on forecasting
You said that interest rates might rise when unemployment fell to 7%, but they didn’t. Then you said they might rise once real wages went up, but they didn’t. Then you suggested rate could go up at the turn of 2016. They didn’t. So....You said that interest rates might rise when unemployment fell to 7%, but they didn’t. Then you said they might rise once real wages went up, but they didn’t. Then you suggested rate could go up at the turn of 2016. They didn’t. So....
Q: If the bank can’t forecast its own actions, why should we trust your forecasts? You didn’t even predict the halving of the oil price.Q: If the bank can’t forecast its own actions, why should we trust your forecasts? You didn’t even predict the halving of the oil price.
Deputy governor Ben Broadbent says no-one predicted that oil would fall so sharply. Financial markets make their best guess about these moves.Deputy governor Ben Broadbent says no-one predicted that oil would fall so sharply. Financial markets make their best guess about these moves.
Q: Well, you’ve just proved the impossibility of making major economic predictions (such as the impact of Brexit)Q: Well, you’ve just proved the impossibility of making major economic predictions (such as the impact of Brexit)
That’s a false dichotomy, Broadbent replies. You can’t say that forecasting is impossible, just because you can’t predict everything.That’s a false dichotomy, Broadbent replies. You can’t say that forecasting is impossible, just because you can’t predict everything.
Just because the future is uncertain doesn’t mean that forecasting is useless, he adds.Just because the future is uncertain doesn’t mean that forecasting is useless, he adds.
[This is an example of what Sky’s Faisal Islam yesterday called the ‘pizza analogy’:][This is an example of what Sky’s Faisal Islam yesterday called the ‘pizza analogy’:]
That's pizza analogy - cant predict what you will weigh in a year or 20 years..CAn predict if you eat a pizza every hour -fatter than if notThat's pizza analogy - cant predict what you will weigh in a year or 20 years..CAn predict if you eat a pizza every hour -fatter than if not
11.46am BST11.46am BST
11:4611:46
Steve Baker MP goes next, and reduces Mark Carney to giggles.Steve Baker MP goes next, and reduces Mark Carney to giggles.
Baker, another pro-Brexit MP, tells the Bank of England’s top brass that he positively rejects the idea that they are wicked conspirators.Baker, another pro-Brexit MP, tells the Bank of England’s top brass that he positively rejects the idea that they are wicked conspirators.
Instead....Instead....
I choose to believe your wholesale innocence, completely unsullied by the grubby politics of this referendum matter. As it happens I think you’re just wrong....I choose to believe your wholesale innocence, completely unsullied by the grubby politics of this referendum matter. As it happens I think you’re just wrong....
Baker also invites Carney to the Annual Hayek Memorial Lecture held by the IEA thinktank on 8 June, to learn the error of his ways.Baker also invites Carney to the Annual Hayek Memorial Lecture held by the IEA thinktank on 8 June, to learn the error of his ways.
You can sign up here: George Selgin on stability without Central BanksYou can sign up here: George Selgin on stability without Central Banks
11.39am BST11.39am BST
11:3911:39
During a long discussion on sterling, Ben Broadbent suggests that the pound could fall by 5% if Britain votes to leave the EU.During a long discussion on sterling, Ben Broadbent suggests that the pound could fall by 5% if Britain votes to leave the EU.
UpdatedUpdated
at 11.39am BSTat 11.39am BST
11.38am BST
11:38
23% of undecideds trust Mark, only 1% trust George! #EUref : Carney doubles down on Brexit recession risk warning https://t.co/xni2Vns8uV
11.28am BST
11:28
Ben Chu of the Independent says that Mark Carney has “doubled down” on his concerns over the EU referendum this morning.
And that could be significant, as opinion polls have found that the public trust the Bank of England governor more than Westminster’s best and brightest.
Ben writes:
The Governor of the Bank of England, one of the most trusted public figures in the UK, has sounded another warning about the instant economic shock Brexit would inflict on Britain.
Speaking in front of MPs on the Treasury Select Committee, Mark Carney, who recent polling suggested is more trusted among the public than senior politicians, said: “Brexit to my mind would have a material impact on growth and inflation. It would be likely to have a negative impact in the short term.”
Following up on his words earlier this month, Mr Carney added: “I certainly think that would increase the risk of recession.”
Mr Carney’s warning follows a stark warning from the Chancellor yesterday, citing Treasury economic analysis, that Brexit would lead to an immediate year-long recession for the UK.
More here:
Carney doubles down on Brexit recession risk warning in front of MPs https://t.co/Hv8LioPJdl
11.25am BST
11:25
Asked about recent movements in the pound, Mark Carney says sterling has been tracking the probability of Britain leaving the EU (rising when Brexit looks less likely).
11.19am BST
11:19
Mark Carney had early look at Treasury's Brexit work
This may not reassure critics of the Bank’s independence....
Carney reveals he saw a copy of the HMT report two weeks ago at breakfast with the Chancellor
Osborne gave Carney an advance copy of the Treasury document on Brexit over breakfast - Carney says there was no collaboration
Carney says he saw the draft version, because it included economic forecasts, but he didn’t give any feedback.
Deputy governor Ben Broadbent, though, says he’s hardly looked at the Treasury’s analysis at all (which warns that Brexit would cause a DIY recession)
Updated
at 11.23am BST
11.16am BST
11:16
John Mann MP now takes up the issue of the Bank’s independence (or lack of) over Brexit.
He says the external members of the Monetary Policy Committee – Martin Weale and Gertjan Vlieghe – are being accused of simply “doing whatever the governor tells you to do”.
Weale points out that he’s often disagreed with the rest of the committee, by voting to raise interest rates in recent years (before changing his mind).
Q: But why aren’t the external members at the Bank speaking up against these slurs on your integrity?
Vlieghe says he does resent the implication that the committee are under the control of Mark Carney, or George Osborne. He insists that there’s no secretive control of the Bank.
No-one has told me, or asked me, about which way these discussions should go.
Mann suggests that if the MPC’s external members are truly independent, they should speak up a bit.
Labour's @JohnMannMP suggests BoE's external MPC members are doing Mark Carney's bidding. They politely disagree. pic.twitter.com/wr8Uu97Z95
11.10am BST
11:10
Perhaps sensibly, Mark Carney declines to comment on the Brexit analysis issued by the Treasury yesterday, which predicted four quarters of recession.
11.08am BST
11:08
Mark Carney then warns that a vote to leave the EU could prompt a ‘Pavolvian’ reaction in the City, pushing up the risk premium on UK assets.
But it would also be hard to the Bank to stimulate the economy, if a weaker pound drove up inflation.
Financial markets have an "almost Pavlovian response to bad news", Mark Carney tells @RachelReevesMP.
Carney: After #Brexit, ex rate/supply side shock wld put upward pressure on inflation, reducing likelihood of stimulus even if econ slows.
11.03am BST
11:03
Rachel Reeves then questions Mark Carney about the implications of Britain leaving the EU.
Mark Carney agrees that Brexit could cause the pound to weaken, creating an upside shock to inflation that would make it harder to keep interest rates low.
If Britain stays in the EU, the next move in interest rates is probably up. If the public vote to leave, there’s less chance of a rate rise.
Deputy governor Ben Broadbent then points out that the UK economy appears to have slowed quite sharply this year - it’s unclear how much of this is due to Brexit fears.
10.58am BST
10:58
Committee chairman Andrew Tyrie steps in -- perhaps worried that Mark Carney and Jacob Rees-Mogg might take their argument outside.
He tells the BoE governor that many members of the commitee would have been concerned if the Bank had NOT discussed the EU referendum.
Labour MP Rachel Reeves than puts the boot into Rees-Mogg, saying:
If anyone’s reputation has been damaged by today’s performance, it’s not the Bank of England.
Carney be like pic.twitter.com/Oft0ElUXbL
Carney 3 Rees-Mogg 0
Updated
at 11.00am BST
10.50am BST
10:50
Carney accused of 'political involvement' over Brexit.
Jacob Rees-Mogg MP now accuses Carney of being influenced by chancellor George Osborne.
As the gloves come off, Carney insists that he’s not being played by government.
There’s “no possibility of undue influence from the Treasury”, Carney insists. It wouldn’t work anyway, even if they tried
Rees-Mogg repeatedly trying to establish HMT influence over the Bank of England. "There is no possibility of undue influence", says Carney.
Q: So it’s very convenient that you’re putting out the same propaganda as the Chancellor?
I don’t accept that at all, Carney replies.
Q: But you have a duty to remain apolitical. How can anyone trust you on interest rates now?
Our comments might not please you, Carney shoots back, but it has improved the chances of the economy recovering from the Brexit undertainty.
To suggest otherwise is to try to undermine it.
Rees Mogg insists that Carney has become politically involved...
I don’t think it’s worth replying to, says Carney, trying to swat the pro-Brexit MP aside.
Rees-Mogg leaves Carney speechless after accusing him of getting "politically involved". "I don't think that's worth replying to" #euref
Updated
at 11.31am BST