Mark Carney

Negative rates? No thanks says Carney

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Bonds worth $15tn, about a quarter of the global market, are offering negative returns, the FT reported last week. In other words, $100 of bonds, including interest payments, will return less than that amount throughout their lives. That's useful context in understanding why central bankers keep being asked about negative rates.

The central banks of the Eurozone, Switzerland, Japan, Sweden and Denmark all have rates set below zero to try and tackle very low inflation. It isn't working, but that's another story. Anyway, the Bank of England's governor Mark Carney has been asked whether the UK will try the policy.

"At this stage we do not see negative rates as an option here. I am not criticising others that have used them, but we don't see it as an option," Mr Carney told website Central Banking on 1 August in an interview published today.

Carney criticised for 'scary soundbites'

Mark Carney

Back to those comments from Mark Carney, governor of the Bank of England, who has told the BBC that a no-deal Brexit would result in an instant shock to the UK economy

Paul Dales, UK chief economist at Capital Economics, told the BBC: "I think it’s very important to note there are many different types of no-deals and Mark Carney seems to be talking about the worst possible type, which I don’t think is actually going to happen because at least some businesses have done some preparations.

"It would actually be really useful if, rather than just throw us a few scary soundbites every now and then, Mark Carney and his team at the Bank can actually provide a full set of forecasts on what they actually think is going to happen".

And might the Treasury be able to mitigate any impact? "A no-deal would certainly be a hit to the economy, but that hit can be cushioned somewhat by the behaviour of the Chancellor who might be able to lower taxes and boost government spending, and the Bank of England itself, who would probably lower interest rates so as well as thinking about the worse things that can happen, you probably also need to think about the potential offsets too".

A vote on the IMF job?

Christine Lagarde is becoming the new head of the European Central Bank.
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Christine Lagarde is becoming the new head of the European Central Bank.

The Financial Times is reporting on Friday's front page that EU finance ministers are to vote today on Europe's candidate to succeed Christine Lagarde as managing director of the International Monetary Fund.

The EU's 28 finance ministers will vote via email on a shortlist of at least five names and is necessary because a consensus cannot be reached, the FT said.

Now, in an update, the FT reports that the UK's government has told the EU it does not approve of the unprecedented vote and that it missed the EU's deadline to put forward candidates.

It reports that the UK wrote to France — which is leading the negotiations — to say it was “premature to rush to a voting procedure, in particular as the [IMF] nomination period only closes on 6 September”.

The names on the shortlist are Jeroen Dijsselbloem, the former Dutch chair of the eurogroup of EU finance ministers, Olli Rehn, Finland’s central bank governor, Nadia Calviño, Spain’s finance minister, and Kristalina Georgieva, the Bulgarian World Bank chief executive.

Mark Carney, governor of the Bank of England, regarded as interested in the position, told BBC Radio 4's Today Programme, that the IMF position was an "extremely important role".

Shock of no deal would be instant, says Carney
The governor of the Bank of England says a no-deal Brexit would send the pound lower and push up prices.

Carney: No-deal would mean higher petrol and food prices

Today Programme

BBC Radio 4

Mr Carney said, in the event of a no-deal Brexit, "one would expect prices to go up".

"In the event of no-deal the exchange rate would go down for a period of time. And in the area of the economy where that instantly translates to - prices - it's in the forecourt of the petrol station and in food and veg."

"This is just straight economics.

"With 90 days away... it's constructive to recognise these issues.

"The exchange rate going down helps with adjustment [to Brexit], but it does have the consequence that things like food, petrol, other day-to-day items are more expensive."

Carney: No-deal would create 'instantaneous' shock

Today Programme

BBC Radio 4

"With no-deal the shock to the economy is instantaneous and that instantly you have the supply - not just disruption, I'm not just talking about the issues at the ports, which are real - but you actually have businesses which are no longer economic.

"He said that potentially a "substantial number" of business would no longer be economic.

Automotive, food and chemicals, transport are the types of sectors that will be most affected he said.

Carney: 'Not helpful' to downplay challenges of Brexit

Today Programme

BBC Radio 4

Today Programme

Bank of England governor Mark Carney is on the Today Programme. He has been accused of stoking fears about Brexit, but he defends himself against those critics.

"It is not helpful to downplay the challenges in terms of logistics, whether they are at ports, whether they are in the plumbing of the financial system, whether they have to do with personal data.

"It is also not helpful to deny that shifting from the most integrated economic relationship in the world, which is being a member of the European Union, to a new relationship which is potentially just WTO relationship, that that would not - if we move overnight to that - that would not have an effect on the economy."

Markets v Bank - who is right?

Today Programme

BBC Radio 4

Bank of England Governor Mark Carney
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Bank of England Governor Mark Carney will be on the Today programme at around 8:10 and he is likely to be asked why new forecasts for UK economic growth are based on the country reaching a departure deal with the EU, when the market is pricing in a hard Brexit.

For market watchers it is "tough" says Liz Martins, chief UK economist at HSBC.

"You have to base your assumptions on government policy as the Bank said and the government policy is to get a deal. But clearly the risk [of no-deal] is rising and market perceptions of the risk are rising."

Tune into Radio 4 this morning to hear what Mr Carney has to say.

Is the Bank too gloomy?

Szu Ping Chan

Business Reporter, BBC News

PA Media

Mr Carney says the extra cash the Treasury has set aside for no-deal Brexit planning represents a “recognition that more needs to be done”.

The press conference ends with a simple question: are the Bank’s forecasts too gloomy?

While he says the jobs market remains robust, Mr Carney adds the Bank is clear that Brexit has led to uncertainty in the business community which has translated into less spending and investment.

Also, the initial boost to trade from the weaker pound is starting to fade. “These consequences are there,” he says.