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Bank of England DESTROYING its credibility by interfering too much in Brexit – economist


In a scathing attack, Kallum Pickering, senior economist at Berenberg Bank, argued markets are paying less attention to the UK lender because they do not trust its Brexit forecast. Mr Pickering described the BoE as having “waning influence” over the markets because the bank’s communication has become “needlessly complicated”. He went on to accuse the BoE of excessively intervening in Brexit politics and said a worst-case Brexit scenario publication released in November was overstressed. The bank has been vocal in its concerns that a no-deal Brexit could be detrimental for the UK economy with Mark Carney previous stating leaving without a deal would be the “worst outcome” for Britain.

Mr Pickering said: “By over-emphasising the potential consequences of a no-deal hard Brexit, it has overreached and invited mostly undue criticism.”

He went as far as saying the bank “had no idea where rates are heading over the next 12 months” and said borrowers could face rate rises unless the BoE claws back credibility.

The economy risks become jarred from temporary inflation shocks, Mr Pickering argued.

In his criticism, he cited the response by financial markets to last month’s Inflation Report and said the Governor had been flip-flopping on rates.

He said: “The Bank’s approach to monetary policy is damaging its credibility.

“Its own surveys show that a record balance of households has no idea where rates are heading over the next 12 months.”

In its latest inflation update, the BoE held rates at 0.75 percent.

Mr Pickering argued the bank’s own assessments are not in line with how rates have risen.

Express.co.uk has asked the BoE for comment.

Back in November, the bank upgraded its forecast for UK economic growth in 2019 and now sees growth of 1.5 percent for this year, up from the 1.2 percent forecast in February.

In 2020, the economy is predicted to grow by 1.6 percent, while the UK is forecast to enjoy a boost of 2.1 percent in 2.1 percent.

The BoE justified its latest forecast by saying Brexit “would not be automatic and could be in either direction”.

It comes as Theresa May faces growing calls to resign as she battled to gain support for the latest version of her withdrawal agreement.



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