Carney defends private Osborne Brexit meetings

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    The Bank of England governor has said it is “important” that he and Chancellor George Osborne are allowed to have private meetings.

    However, Mark Carney has agreed minutes of their private talks on Brexit may be examined ‘discreetly’ by MPs.

    It was his first time giving evidence to MPs since the vote.

    He denied again that the Bank of England had tried to “frighten” the public about the negative effect a Brexit vote could have on the economy.

    Supporters of Leave – including two former Conservative Chancellors – accused him last month of “peddling phoney forecasts”.

    “It is our responsibility to give these assessments…we have an obligation to make these assessments,” said Mr Carney.

    “The debate cannot be about whether we should have made an assessment. If we view something as the biggest risk, we have an obligation, a statutory obligation, to make that clear to parliament. We have an obligation to the people of the United Kingdom to come straight with them,” he added.

    Responsibility

    Questioned by the Treasury Select committee’s chairman Andrew Tyrie on his private meetings with Chancellor George Osborne, he reluctantly agreed that he would be prepared for any notes taken by private secretaries to be examined by a committee representative, on the condition that “we can create a process which relies on the discretion of you and the committee so we’re not putting things into the public domain are immediately commercially sensitive.”

    He told MPs he did not want to limit “free-flowing” discussions.

    He added he would not want to create a situation where those conversations were tweeted and otherwise made public. Mr Tyrie said there were precedents for sensitive conversations being examined by members of the Committee.

    Mr Carney was limited about what he could say about interest rates as he is in “purdah” ahead of Thursday’s Monetary Policy Committee decision on rates. Many commentators expect rates to be cut from 0.5% to 0.25% to stimulate the economy.

    Cash buffers

    Mr Carney was also asked about the Bank’s decision post the referendum to reduce the “counter-cyclical capital buffer” held on banks’ balance sheets. The buffer is cash which is set aside in good times so that it can be made available when the downturn comes. The reduction will allow banks to increase credit supply to households and businesses by £150bn.

    “We’re in a situation of increased uncertainty,” said Mr Carney, adding that the banks were well capitalised.

    “During this period there may be a reduction in credit demand, reduction in risk taking and in that environment we wanted to use the counter-cyclical credit buffer policy as it is supposed to be used.

    “We really do want to make it as clear as possible to households and businesses that credit should be available for the right ideas and right transactions be it a mortgage or a new business,” he added.

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