Bank governor Mark Carney accused of 'over-egging' Brexit warnings

Mark Carney answers questions in front of the Commons Treasury Select Committee

BANK of England governor Mark Carney has denied accusations he overplayed warnings over Brexit.

Appearing before MPs at Westminster's treasury select committee, it was alleged Mr Carney "over-egged" warnings and "encouraged an overreaction" after the EU referendum.

But Mr Carney insisted he was "comfortable" with the bank's warnings ahead of the vote and said last month's move to slash interest rates and deliver an emergency package of measures was working.

Conservative MP and pro-Brexit committee member Jacob Rees-Mogg accused the bank earlier this week of unleashing its August rate cut and stimulus package without sufficient evidence.

But Mr Carney told the committee the bank took "timely, comprehensive and concrete" action, which acted to "support, cushion and help the economy to adjust".

Last month's rate cut to a new historic low of 0.25 per cent has helped to support house prices and the wider economy, he said.

"There has been quite a considerable improvement in mortgage borrowing costs and we are seeing pass through of our actions," he said.

In the latest in a series of fiery exchanges, Mr Rees-Mogg said if the bank knew its actions would be so effective, it "wouldn't need the dire warnings" made ahead of the referendum.

Mr Rees-Mogg had previously accused Mr Carney of peddling treasury "propaganda" and called for his resignation after the governor warned before the referendum a Brexit vote could cause a technical recession.

Recent closely-watched industry data has suggested that major sectors of the economy have bounced back after an initial shock reaction in the immediate aftermath of the decision to quit the EU.

Mr Carney said: "In light of all the events, I'm absolutely serene about the judgments made by the monetary policy committee and financial policy committee."

He added it was "welcome that there has been a rebound" and confirmed the chances of a technical recession had gone down since the Bank's economy-boosting moves last month.

Labour MP Rachel Reeves raised concerns that the majority of lenders had yet to pass on the full cut in rates.

Mr Carney reassured the bank expected "virtually" all the rate cut to be passed on to borrowers in the next few months.

The MPC was "clear-eyed" about the risks around Brexit, Mr Carney said.

He denied having given "dire" warnings, noting that the Bank's own economic forecasts at the time were higher than consensus estimates.

"To be clear, if you want to take private sector forecasts, they were more pessimistic than the Bank of England," he added.

Mr Carney said the Bank's estimates are still higher than revised estimates by Morgan Stanley or JPMorgan.

Both US lenders upgraded their UK economic forecasts this week after data showed the UK service sector swung back to growth in August.

He said the Bank was "very clear" in both its inflation report and the accompanying press conference, that it expected private economic surveys to bounce back in the months following the referendum.

Mr Carney stressed the stimulus package was an aid to those economic indicators, which "improved considerably" since the beginning of August.

"It has helped to reinforce other factors that have been supporting confidence."


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