Bank of England governor Mark Carney will surely be asked about sterling and Brexit when he faces a Parliamentary committee tomorrow. The Bank hasn’t come out strongly in favour of Union yet. But you’d expect it to. Why?
The entire British establishment – financial political – is likely to close ranks the closer the vote gets. You’re trading a “known” – a bad deal with old friends and enemies on the Continent – for an “unknown”. The most dangerous aspect of the vote – from an establishment perspective – it’s made by the British people.
And really, can they be trusted to know what’s best for them?
For markets, Carney’s appearance isn’t likely to do much for stocks. That’s not the case when the US Federal Reserve meets Wednesday and Thursday. If the Fed backs off on its “normalisation” of rates talk, or gets outright “dovish”, it’s probably bullish. And then the Bank of Japan gets its turn on Friday.
One final thought on taking bigger hits of monetary stimulus for a shorter-lived high: it’s a stupid game to play with retirement money.
If we’ve learned anything in the last six years, it’s that you can’t create real, lasting wealth by lowering interest rates and stimulating demand. The central bankers are not in control. They’d like you to believe they are. Don’t believe the hype.
Category: Central Banks