The Bank of England is more likely to cut interest rates than raise them in the ...
LONDON - The Bank of England is more likely to cut interest rates than raise them in the event of a no-deal Brexit, rate-setter Silvana Tenreyro said, the latest BoE official to back the idea of coming to the economy’s rescue if it suffers a Brexit shock.
The BoE has said its response to a chaotic exit from the European Union would not be automatic because a fall in the value of the pound and the imposition of tariffs on trade could push up inflation, making the case for a rate hike.“In my judgment, a situation where the negative demand effects outweigh those other effects is more likely, which would necessitate a loosening in policy,” Tenreyro said in a speech given in Glasgow.
In the event of a smooth Brexit, Tenreyro said there would be a “small amount of tightening” needed over the next three years, although she added that she would need to see an increase in price pressures first. Tenreyro said Britain’s economy had not been hitting the limits of its ability to grow without generating excessive inflation. Supply grew in line with demand over the last couple of years, if not faster, she said.
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