Bank of England’s Carney sees Brexit pushing up inflation, rate rise likely

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Mark Carney, governor of the Bank of England (BOE).

Bank of England Governor Mark Carney said Brexit was likely to push up Britain’s inflation rate and he reiterated the central bank’s new view that interest rates are likely to rise in the coming
months.

Carney, making a speech at the International Monetary Fund’s headquarters in Washington, said the process of globalisation that has led to deeper integration in the world economy in recent decades had pushed down price growth.

But Brexit represented the opposite for Britain, at least in the short term, as less openness to foreign markets and workers was likely to push up inflation and reduce productivity, he said.

“On balance, the de-integration effects of Brexit can be expected to … be inflationary,” he said. “At present, the main question concerns the extent to which this adjustment has been brought forward.”

Britain’s inflation has accelerated this year, due in large part to the fall in the value of the pound since the referendum decision in June 2016 to leave the European Union.