The Bank of England is independent of government control and has a remit to deliver low inflation, ensure price stability and support government economic objectives for growth and employment in order to support sustainable economic growth. Its governor, Mark Carney, has come under fire from Leave campaigners for pointing out the economic risks to the UK of Brexit, claiming that he is venturing into the murky world of politics. Champions of Remain, and Mr Carney himself, have been quick to assure the public that this is not the case.
With less than a week to go until the UK referendum on its continued membership of the EU, the Bank has again entered into the fray with a warning that Sterling would fall further in the event of a Brexit and the fall could be sharp. It also noted that there were "risks of adverse spill-overs to the global economy" of a Brexit and that uncertainty over the outcome of the vote was the "largest immediate risk" confronting global financial markets at the moment.
In what is surely the most ironic comment of the referendum to date, Andrea Leadsom of Vote Leave suggested that the Bank’s comments risked financial stability!
The Monetary Policy Committee of the Bank decided to leave the interest rate unchanged at 0.5% at its latest meeting. Minutes from their May meeting noted that a "vote to leave the EU could materially alter the outlook for output and inflation". They noted that there was growing evidence that UK businesses and consumers (interestingly) have been delaying major economic decisions until after the vote. Consumers apparently have delayed car and real estate purchases during this period of uncertainty. The Bank sought to reassure all concerned that it had contingency plans in hand to deal with potential fallout from the UK plebiscite.