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HIGHLIGHTS - Bank of England's Carney speaking in Scotland
January 29, 2014 / 2:06 PM / 4 years ago

HIGHLIGHTS - Bank of England's Carney speaking in Scotland

EDINBURGH, Jan 29 (Reuters) - Bank of England Governor Mark Carney spoke to business leaders and to media after making a speech in Scotland. Below are highlights of his comments.


- Asked if a currency union was too difficult, he said: “I didn’t mean to suggest that, I merely meant to underscore what the core issues were and then I would suggest that it is the responsibiliy of the parties to outline how they would address those issues. Either refute those issues as issues or outline how they would address those issues and then others can judge whether those proposed arrangements would be successful.”


- “That is one of the issues that would need to be determined ... The short answer is I can’t answer the question, It’s not for us to say.”


- “There is a financial system here that is substantially larger than Scottish GDP ... and the banking system specifically.”

- “It brings back the importance ... that we - whether in Scotland, the United Kingdom, Europe, the U.S., Canada - have to end too-big-to fail, and we have to finish these various reforms that are being worked through the FSB and G20 this year.”

- “However, even with doing that, there are residual calls on the national balance sheet through the central bank. An indirect link becomes very much a direct link, because banks tend to hold the debt of their home country, at least in a substantial portion, and that needs to be taken into consideration.”

- “Others will judge about the sustainability of that, and I‘m not going to provide you a conclusion on that issue.”


- “In terms of sterling, in general we avoid commenting on the level of the currency or providing commentary on the currency.”

- “We would expect some pass-through of sterling strength to help reinforce other forces that were helping to create a more benign inflation environment - more benign not totally benign - and they include global disinflationary pressures.”

- “Price movements in the euro zone, in the U.S. are quite weak and commodity prices as a whole... have been weaker than the recent past.”

- “So it’s within a context of providing some dampening to the inflation outlook.”

- “That leads us to expect that the pace of consumption - growth, the pace of household spending as a whole including housing investment - will gradually slow over the course of the coming quarters which makes it that much more important that we see investment pick-up and ultimately exports picking up.”


- “It’s incredibly important what happens in the U.S.. There are some real similarities in the stance of monetary policy - in the strategy of monetary - between the UK and the U.S..”

- “We are not continuing with asset purchases, so that’s different as a tactic, but the general question is how much slack is in our economies, and to what extent can highly accommodative policy encourage sustainable demand to pick up some of that slack.”

- “We provided for the first phase of forward guidance, we used the 7.0 percent unemployment threshold to give businesses in Scotland and across the UK a confidence that we weren’t going to premature withdraw monetary stimulus.”

- “The MPC has signalled that we don’t see any need for an immediate adjustment to that policy, and we will provide further thinking on guidance in the coming weeks.”

- “But I will say, one last point .., that while the market has had a different view on when the unemployment threshold was going to be achieved, and the market view has been closer to the base case forecasts of the bank, the market has clearly taken in that 7 pct is a threshold and not a trigger.”

- “And in fact market expectations of when we would raise interest rates are still in 2015, and the first quarter of 2015, which is consistent with that.”

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