NEWS Release - Brexit and Monetary Policy - speech by Martin Weale - 18 July 2016
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Introduction
Thank you for inviting me here for my last outside appearance as a member of the Monetary Policy Committee. I had intended to provide some sort of retrospective assessment of my time on the Committee and an account of some of the major policy-making challenges we have faced. But the result of last month’s referendum gives a very real sense that my final few weeks on the Committee are being spent in a world, or at least a country very different from that of my first five years and eleven months.
The Committee will produce a new forecast for the economy in the August Inflation Report, produced on the assumption that we leave the European Union, and today I obviously do not know what sort of judgements we are going to make about Britain’s future circumstances. I am not going to forecast the forecast. As many people have pointed out, our eventual arrangements will be the outcome of a long negotiation process. But today I would like to draw attention to some of the issues which arise for monetary policy and see how far our previous experience can be a guide as to how it might be sensible to respond.
I will first provide a summary of the key economic developments since the evening of 23rd June. I will follow this with some observations about what can be learned from the past. Next I will offer some brief observations on the importance of the work that other parts of the Bank have done to ensure that shocks such as the referendum result can be handled as smoothly as possible. And finally I will offer some thoughts about how the Monetary Policy Committee may address the movements which have taken place. Of course I should stress that these are my own views, and other present and future members of the Committee may see things differently.
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