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8/23, 9:04 PM (Source: TeleTrader)
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Carney: No-deal Brexit likelihood sharply higher

Bank of England Governor Mark Carney said at the Jackson Hole symposium on Friday that the pound would most likely fall in case the United Kingdom left the European Union without a deal and warned that such a scenario is becoming more likely.

"In recent weeks, the perceived likelihood of No Deal has risen sharply as evidenced by betting odds and financial market asset pricing," Carney stated. "In the event of a No Deal No Transition Brexit, sterling would probably fall, pushing up inflation, and demand would weaken further, reflecting lost trade access, heightened uncertainty and tighter financial conditions," he added. However, he noted that the central bank's Monetary Policy Committee's (MPC) response to a disorderly Brexit "would not be automatic" and would depend on how a no-deal scenario would affect the economy. Still, according to Carney, "the appropriate policy path would be more likely to ease than not."

On the other hand, Carney stressed that the bank would likely gradually increase rates in case Britain exits the EU with an agreement, which he said could still happen.

Breaking the News / NP