Bank of England’s Carney says confident United Kingdom slowdown was temporary

Carney v Trump

Carney v Trump

The governor of the Bank of England has warned Donald Trump that further escalation of USA trade disputes around the world would damage the American economy most, with potential to lower United States growth by around 5%.

Sterling hit a day's high against the dollar after Carney said inflation pressures had continued to firm, as the BoE expected, and that there was widespread evidence that slack in the economy had been largely used up.

Responding to questions at a business summit, where he hinted that he may vote to raise interest rates in August, he said that if England won, "everything would be good".

There was nothing in Carney's comments to cast doubt over that view.

Bank of England Gov. Mark Carney warned Thursday about the risks to the global economy from a full-blown trade war, saying higher tariffs between the USA and its major trading partners could weigh on growth for years to come.

Carney said recent data had given him "greater confidence" that weak first-quarter growth "was largely due to the weather".

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Since then, consumer and household spending have increased significantly.

Data points to a pick-up in growth in the second quarter of the year, after a disappointing start to 2018, according to the chief monetary policymaker.

"Bank of England simulations suggest that the impact of narrow, bilateral tariff increases through direct trade channels would tend to be small - reflecting the small share of overall exports affected - and would be largely confined to the countries directly involved", Carney said.

"There are some tentative signs that this more hostile and uncertain trading environment may be damping activity", Carney said, pointing to recent global surveys.

Businesses "have been wondering whether changes to trading arrangements will require them to switch suppliers or find new customers, whether to expand production or even close down certain activities", he said. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.

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