BOE's Carney Says Pound Drop Has Squeezed Incomes

The transcript discusses the UK's uncertain economic relationship with the EU post-Brexit, highlighting the role of monetary policy in managing real incomes and inflation. It examines the varied reactions of households, businesses, and financial markets to Brexit, noting the impact on spending and investment. The MPC's projections assume a smooth transition, affecting demand and supply, and emphasize the importance of expectations in shaping economic behavior.

What role can monetary policy play in the context of Brexit's impact on the UK economy?

• It can prevent job losses entirely.

• It can stop the Brexit process.

• It can eliminate price rises.

• It can influence how income impacts are distributed.

How did UK households initially respond to Brexit-related uncertainties?

• They ignored the uncertainties at first.

• They increased their spending.

• They immediately cut back on spending.

• They invested more aggressively.

What was the reaction of financial markets, particularly sterling, to the UK's Brexit prospects?

• They showed no reaction.

• They marked down the UK's prospects slowly.

• They marked down the UK's prospects quickly and sharply.

• They increased the value of sterling.

What assumption does the MPC make about the Brexit transition in its projections?

• A complete breakdown of negotiations.

• An immediate resolution of all uncertainties.

• A smooth transition without material disruptions.

• A chaotic transition with disruptions.

According to the MPC, what weighs on the decisions of businesses and households regarding the UK's future economic relationship with the EU?

• Complete knowledge of the negotiation results.

• Certainty about the outcome.

• A lack of interest in the outcome.

• Uncertainty about the eventual shape of the relationship.