Mark Carney stood by the actions of the Bank of England around the Brexit vote as his testimony to lawmakers quickly turned into a grilling by his most vocal critic.
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In a Treasury Select Committee hearing, Mr Carney responded to accusations the bank exaggerated the economic hit ahead of the vote and “encouraged an overreaction after it”.
Last month’s decision by the Bank’s MPC to cut the interest rate to 0.25%, its lowest ever rate, supported house prices and the wider economy, according to Mr Carney, providing an improvement in mortgage borrowing costs which he was confident would be passed on to consumers.
Mr Carney repeatedly insisted Brexit was a major threat to the economy in the run up to the referendum and he was accused of joining the Remain campaign’s Project Fear.
Mr Carney had warned prior to the vote that a Brexit outcome could lead to a slowdown and possibly see the United Kingdom slide into recession.
He said the Bank had expected the main sectors of Britain’s economy to bounce back after the initial impact of the referendum in July, as shown in a series of purchasing managers’ indexes published in recent days.
“In light of all the events since the referendum, I’m absolutely serene about the comments made both by the monetary policy committee and the financial policy committee”, he said.
Cunliffe said he expected to vote for another rate cut this year if the economy evolved as the Bank forecast last month.
“We have made the crystalisation of those risks less likely” he said.
The proportion of British people expecting an interest rates rise in the next year has fallen to a record low, a Bank of England survey has shown.
In the latest Bank of England/TNS inflation Attitudes survey, the expected annual inflation rate for the next 12 months was 2.2% for August from 2.0% the previous quarter.
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“I’m quite comfortable with the analysis we did in advance, the preparation we did in advance, the effectiveness of the contingency measures, all of which put us in a position to help this economy adjust.and to help make the leaving of the European Union a success as quickly as possible”.
