BoE Deputy Says CB Was Too Pessimistic About Brexit

Bank of England deputy governor Ben Broadbent has said policymakers had been too pessimistic about the immediate aftermath of the Brexit vote, but warned of an “insidious” threat to business investment.

“There’s little doubt that the economy has performed better than surveys suggested immediately after the referendum and … somewhat more strongly than our near-term forecasts as well,” Broadbent said in a speech at the Wall Street Journal’s offices in London.

“The central projection in the August inflation report didn’t involve a recession, simply a slowing in the economy’s rate of growth. But that slowing looks so far to have been more moderate than we feared.”

But the deputy governor cautioned against reading too much into individual pieces of data following the UK’s decision to leave the EU.

He said that while consumer spending would be “relatively unperturbed”, the greater risk would be a hit to business investment, as companies hold off on big spending commitments because of heightened uncertainty.

“A lack of clarity about the UK’s future trading relationships needn’t result in visible, headline-grabbing closures of productive capacity. The effect is likely to be more insidious: decisions to expand, that might otherwise have been taken, are delayed.”

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza