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Carney warns lenders about rate cut in Brexit scenario

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  • 09/05/2016
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Carney warns lenders about rate cut in Brexit scenario
Bank of England governor Mark Carney has issued a private warning to banks over risks associated with the UK opting to leave the European Union in June.

Lenders are being told to prepare for the likely impact of an interest rate cut in the event of a Brexit on 23 June, a report in the Sunday Times said.

One bank chief executive is reported to have been invited to the Bank at Threadneedle Street where he was encouraged to check whether his firm’s balance sheet could cope in the event of a rate cut.

The Bank has already raised concerns about the impact of an EU exit, when the Monetary Policy Committee warned that this could result in “significant implications” for the value of sterling.

Carney also came under fire for his stance on EU membership during a Treasury Select Committee in March, when he said that the issue was the “biggest domestic risk to financial stability”.

Committee member Jacob Rees-Mogg MP accused Carney of making speculative comments about EU membership while failing to give a balanced view of the risks of remaining in the union.

Chancellor George Osborne also added to the debate on Sunday, when he said homeowners would be hit significantly by lower house prices and higher mortgage costs if the UK votes ‘leave’ next month.

Speaking on ITV’s Peston on Sunday, Osborne said: “I am pretty clear that there will be a significant hit to the value of people’s homes and to the cost of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU.”

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