Investing.com - Bank of England Governor Mark Carney warned on Thursday that the “fog of Brexit” is creating “a series of tensions” in the U.K. economy, causing short-term volatility in domestic economic data and weighing on business and consumer spending.
Speaking at the BoE's post-meeting press conference in London, Carney added that the U.K. economy as a whole is not yet prepared for a no-deal Brexit.
"Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no-deal, no transition exit."
He continued that any persistent change in sterling would have "material consequences for inflation", which could temporarily fall below 2%.
Carney repeated that the monetary policy response to Brexit will not be automatic.
His comments came after the Bank of England left its key interest rate unchanged for the fourth straight meeting, as expected, with all nine members of its policy-making committee again voting to keep rates steady amid growing uncertainty over the prospect of Britain exiting the EU on March 29 with no deal in place.
With just 50 days until the deadline for the U.K. to leave the EU, the economy is showing clear signs of slowing down, as uncertainty leads companies to put off investment decisions, while a steady stream of unsettling political headlines weighs on consumer confidence.