Pricing In ‘Brexit’ Risks to Bonds and Fixed Income

The transcript discusses the challenges faced by Carney in maintaining neutrality, especially in the context of political events like the Scottish referendum. It explores the potential market reactions to Brexit, particularly in the bond and FX markets, and the implications for various asset classes. The discussion extends to the potential impact of Brexit on the euro area, highlighting channels of contagion and the role of the ECB. Finally, the conversation touches on the topic of negative interest rates and the Bank of England's policy options in the event of a Brexit-induced shock.

What are the implications of negative interest rates for the UK economy?

In what ways could the Bank of England respond to a negative economic shock?