A former UK interest rate-setter has slammed the Bank of England’s doomsday Brexit report as “extreme” and “implausible”.
Andrew Sentance, a former member of the Monetary Policy Committee (MPC), told MPs the central bank’s Brexit analysis last week assumed a “very extreme” no deal scenario of long-term disruption coupled with high interest rates.
In a hearing with the Treasury Select Committee, Mr Sentance - an ardent critic of governor Mark Carney and recent policy - also took aim at the Bank’s independence and communication.
“They seem to assume that the disruption from a no deal scenario would be very long lasting, which seemed to me to be rather extreme,” he said.
“Secondly, they put in assumptions about the response of policymakers, particularly the MPC, that it would actually raise interest rates to about 5.5%.
“If you look at how the MPC has behaved over the last decade or so, that seems to be very implausible.”
His appearance in front of the committee of MPs comes after Mr Carney insisted on Tuesday that some criticisms of the report were “unfair”.
The analysis published last week prompted a vicious backlash, with pro-Brexit Jacob-Rees Mogg describing Mr Carney as a “second-tier Canadian politician” and claiming he had damaged the Bank’s reputation with his repeated Brexit warnings.
Mr Sentance, himself a Remainer, believes the BoE report went too far and was poorly communicated.
“The way it came across in the media wasn’t really totally clear that it was a very extreme view, even in the Bank’s own terms,” he said.
“The communication of it was less than ideal.”
Mr Carney told the committee on Tuesday that the analysis was only published at its request, while he admitted the worst-case scenario impact of Brexit was a “low probability”.