Carney says Bank of England actions staved off UK recession

Bank of England Governor Mark Carney claims the chances of a UK recession have receded due to its actions.

He told a committee of MPs the risk “has gone down” thanks to its “timely, comprehensive and concrete” action to “support and cushion… the economy”.

Last month’s rate cut to an historic low of 0.25% helped support house prices and the wider economy, he said.

He added he is “absolutely serene” about the Bank’s preparations for the impact from the Brexit vote.

Mr Carney was being questioned by MPs on the Treasury Select Committee about how the Bank handled the referendum outcome and its decision to cut interest rates to a record low.

‘Sailed through’
The Bank was criticised by Brexit supporters for saying the economy would be hit from a vote to leave the EU.

But Mr Carney said the Bank’s decisions had so far been “validated”.

The “extraordinary preparations” made by the Bank “cushioned” the economy and will help the UK “make a success of Brexit”, he told MPs on the Treasury Select Committee.

He said the Bank’s actions were made in an effort “to help make the leaving of the EU a success as quickly as possible”.

“This financial system, under the oversight of the Bank of England, sailed through what was a surprise to the vast majority of financial market participants,” Mr Carney said.

‘Absolutely comfortable’
MPs questioned whether the Bank was too aggressive in supporting the economy after the vote.

The UK’s services, manufacturing and construction industries have all showed signs of recovery in August after taking a hit in July.

However, Mr Carney said he was “absolutely comfortable” with the Bank’s decision to cut interest rates to 0.25% and pump billions of pounds into the economy.

He added that it is “welcome there is a rebound” in the economy.

Considerable improvement
Mr Carney said there has been quite a considerable improvement in mortgage borrowing costs “and we are seeing pass through of our actions”.

When Labour MP Rachel Reeves raised concerns that the majority of lenders had yet to pass on the full cut in rates, Mr Carney said the Bank expected “virtually” all the rate cut to be passed on to borrowers in the next few months.

BBC