LONDON May 11 Bank of England Governor Mark
Carney gave a news conference on Thursday after the central bank
said it may need to raise interest rates before the late 2019
date that markets had been expecting, assuming Britain can leave
the European Union smoothly in two years' time.
Below is a selection of his comments.
CARNEY ON CONSUMER SPENDING
"This is going to be a more challenging time for British
households over the course of this year, real income growth ...
will be negative, wages won't keep up with prices.
"It is important to put this into context - the economy is
still growing solidly, the economy is still creating jobs, wages
are still growing and we actually expect that the pace of wage
growth is going to accelerate as this year progresses and
certainly into 2018, 2019."
CARNEY ON THE MPC AND BREXIT
"The Article 50 process, the negotiation process, that
process and that end state of course has an influence on the
economy and inflation. And we have to take that into account,
and set monetary policy appropriately... But it does not tie the
hands of the MPC. The MPC will take the necessary monetary
decisions at the appropriate time."
CARNEY ON WAGE GROWTH
"The forecast does rely heavily on a recovery of wages, a
pick-up in wage growth.
"It's not a forecast that relies on - it's not a debt
fuelled consumption boom, is my point. It relies on wages.
CARNEY ON A BREXIT SQUEEZE?
"Is the squeeze in real incomes all because of Brexit? Is
that a fair characterisation? And the short answer is no because
part of the story here is that wage growth has been weak.
"Now wage growth has been weak for several years despite
relatively strong, in some respects exceptionally strong, in
terms of actual quantities of labour markets, in other words how
many jobs have been created and hours that people are working."
CARNEY ON DISORDERLY BREXIT
"In order to precisely answer that question, we would have
had to do an alternative forecast, as you can appreciate, with
some variant of a disorderly negotiating process. And we have
not done that.
"As has been the case since our August forecast, we have
assumed that the process of leaving the European Union would be
a smooth one. That means there will be an agreement about future
trading arrangements and there will be a transition, or an
implementation period, from the negotiation to that new
CARNEY ON STIMULUS
"The stimulus isn't excessive, it's appropriate, first
point, and that's the judgement of the committee."
"Secondly, the inflation is above target because the
exchange rate went down 16 percent, why did the exchange rate go
down 16 percent? Largely because of the decision to leave the
"That's a market judgement - I'm not endorsing the
judgement, but that's the market judgement... The question is,
do we lean against that? And lean against something which has a
real underlying fundamental aspect to it.
"Changing monetary policy is not going to change the future
trading relationship between the UK and the European Union or
the UK and other countries."
DEPUTY GOVERNOR BROADBENT ON WAGES AND INCOME
"The squeeze that's coming from rising import prices doesn't
last forever. As the governor said, we're seeing it pretty
acutely right at the moment, it does sort of dwindle over the
forecast period, and that contributes to a rise in income growth
in real terms.
"We still think that the tightness of the labour market
means something for future wage growth.
"We still think that will help some recovery in the growth
rate of nominal pay over the forecast period."
BROADBENT ON INFLATION
Asked about sterling's recent rebound: "It (inflation) has
gone up 3 percent since February so it will have had at the
margin, some depressive effect on inflation towards the end of
(Reporting by Costas Pitas, Emily Roe and Alistair Smout)