Mark Carney hits back at critics over EU comments
Bank of England Governor Mark Carney hit back at critics who have accused him of venturing into politics with his comments that a vote to leave the European Union could hurt Britain's economy, saying it would be political for him to stay silent.
Carney told members of Parliament on Tuesday it was the duty of the bank to weigh up the implications of Britain's membership of the world's biggest single market.
"Assessing and reporting major risks does not mean becoming involved in politics. Rather it would be political to suppress important judgments which relate directly to the Bank's remits and which influence our policy actions," he said.
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Carney has previously described a vote for a so-called Brexit on June 23 as the main domestic risk to Britain's financial stability.
He has also stressed the gains for Britain from its trading relationship with the EU, drawing criticism from some lawmakers who support the campaign to leave the 28-nation bloc.
A former British finance minister, Nigel Lawson, has previously accused Carney of weighing in on the EU debate "in a political way".
The BoE last week issued its clearest warning to date that a Brexit would probably hurt the economy and weaken sterling.
In his annual meeting with members of the House of Lords, the upper chamber of parliament, Carney said he broadly agreed with a report published by the British finance ministry on Monday which said leaving the EU would do permanent damage to the economy.
Risks related to the referendum include pressures on Britain's "remarkably high" current account deficit, its property markets, liquidity in financial markets and a possible negative impact on the rest of the EU, Carney said.
"Some elements of these risks may be beginning to manifest," he said.
Rate dilemma
Flows of foreign capital into commercial real estate stopped in the first three months of 2016, he said, echoing comments made by the Bank's policymakers last week.
The Bank of England faces a possible dilemma after a Brexit vote which could deliver a shock to the economy that the central bank might seek to soften by cutting interest rates further below their record low of 0.5 percent.
At the same time, a vote to leave the EU could also provoke an inflationary fall in the value of sterling, potentially putting pressure on the BoE to raise borrowing costs.
Carney acknowledged on Tuesday that he and his colleagues might be forced to weigh up a weaker outlook for growth and higher inflation after a Brexit vote.
"Ultimately, monetary policy would be set in order to meet the inflation target, while also ensuring that inflation expectations remained anchored," he said.