November 28, 2018 / 5:06 PM / 13 days ago

HIGHLIGHTS-Bank of England's Carney gives news conference after Brexit report

LONDON, Nov 28 (Reuters) - Bank of England Governor Mark Carney and other officials at the central bank are speaking at a news conference after the BoE published a report on the impact of Brexit.

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For a video of the news conference, see here

BOE GOVERNOR MARK CARNEY ON PREPAREDNESS

“If there’s one thing you take from the avalanche of paper and the numbers and the discussion today, it is that the core of the UK financial system is ready for Brexit whatever form it takes.”

“There’s lots of issues that people I’m sure are thinking about, or concerned about, or have questions about. The one area they shouldn’t have questions about is the financial system.”

“The purpose of what we’ve released today... is to provide that reassurance. It’s not supposed to make people scared, it’s supposed to provide reassurance that even if this happened, which is not likely, the system is more than ready for it.”

CARNEY ON COMPANIES

“The proportion of businesses that have contingency plans, or who have initiated contingency plans or who have activated contingency plans remains a fraction of businesses as a whole.

“In several cases, it is very difficult for those businesses to plan for border frictions. They can plan for tariffs, they can plan for a change in the price of selling their goods, but in terms of the logistics of making that happen, it’s very difficult... that’s a very common phenomenon.”

CARNEY ON CUTTING INTEREST RATES

“Lowering interest rates isn’t going to open a port, lowering interest rates is not going to allow a bank in London to continue to operate in the continent if passporting has been taken away.”

CARNEY ON SCAREMONGERING

“Parliament has demanded this analysis.”

“We have to do it. And we’ve done it, and if you have to do it and you’ve done it, and parliament demands it, and you’re accountable to the people of the United Kingdom through parliament, you expose it and there’s nothing more here than that.”

CARNEY ON THE FINANCIAL SYSTEM

“The level of preparedness of businesses and infrastructure, infrastructure such as ports, customs systems and transportation operations, will be important determinants of how well the economy adjusts to new trade barriers.

“Evidence from surveys and other UK authorities suggests that the country is not yet fully prepared for a cliff-edge Brexit.”

CARNEY ON THE FUTURE

“The future potential of this economy and its implications for jobs, real wages and wealth are not in the gift of central bankers.

“Rather the economic consequences of Brexit over the longer term will depend on the nature of the UK’s future trading relationship, on other government policies and ultimately on the ingenuity and enterprise of the British people.”

CARNEY ON NO-DEAL BREXIT

“Our job is not to hope for the best but to prepare for the worst.”

“We have looked at a potential no-deal, no-transition Brexit... the reason we do that is to be prepared for all eventualities.”

CARNEY ON TAKING SIDES

“Our job is to get the system ready for all possibilities... it is absolutely not our job to take one side or another on these issues, that’s clearly the responsibility of parliamentarians.”

CARNEY ON THE WORST CASE OF AN UNLIKELY SCENARIO

“(The FPC has been) looking at exactly these type of scenarios and making sure we’re getting the financial system ready for something that is an unlikely scenario, and even in that unlikely scenario we’ve taken it to what we think is the worst case version of that unlikely scenario.”

CARNEY ON THE REPORT

“These are scenarios, not forecasts. They illustrate what could happen, not necessarily what’s most likely to happen.”

“The scenarios are calculated for the policy relevant timelines for the bank, that is, up to five years, and as such they’re not assessments of the relative long-term merits of different trading relationships.”

CARNEY ON A SUPPLY SHOCK

“In many respects this is the opposite of what happened in the financial crisis, which was principally a demand shock.

“What’s different about this is that it is first and foremost a supply shock which then has demand implications so it is a totally different situation...

“We would be faced with a real challenge ... which is we know the direction of the hit to supply, there would be a negative shock to supply, determining exactly how much of it is coming in at what pace and how persistent that is, will be difficult.

“In a sharp supply shock, the role of monetary policy ... with an exchange rate adjustment which is driven by future real incomes with an inflationary effect from tariffs ... it’s likely to be inflationary.

“In the end we have an inflation target remit ... and we’re not going to ignore it. The probability of a no-deal Brexit has increased with time but even when it was just a small probability, our job was to get the system ready.”

CARNEY ON WHETHER PEOPLE SHOULD BE SCARED

“There’s lots of issues that people I’m sure are thinking about, or concerned about, or have questions about. The one area they shouldn’t have questions about is the financial system.”

“The purpose of what we’ve released today... is to provide that reassurance. It’s not supposed to make people scared, it’s supposed to provide reassurance that even if this happened, which is not likely, the system is more than ready for it.” (Reporting by Kate Holton and Alistair Smout)

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