Carney Q&A Con't.: Q: How should markets........>

BOE: Carney Q&A Con't.: Q: How should markets interpret BoE's data dependency?

- A: Market has to look through certain short-term datapoints. E.g.

Extreme/highly elevated uncertainty tends to prompt over-pessimism in PMI

surveys, feeding through to low PMI-implied growth forecasts. Bank had expected

inventory/stock building volatility. Bank did not anticipate domestic

stockbuilding would be largely result of imports, thereby hitting GDP. 0.2%

forecast for Q2 recognises drag of stockbuilding. If economy is notably

stronger, Bank would look through underlying data to see impact of inventories.

- Q: Is is the case of firms being as ready as they can be for Brexit? Or should

firms take advantage of Brexit delay to prepare further?

- A: There's limits to what firms can do to prepare for extreme 'No Deal' Brexit

scenario. Agents survey shows some firms believe they've done everything they

can. Some firms believe they'll be completely unaffected. Some who believe they

cannot prepare at all (short of resources). Bank notes these preparations can be

very expensive (e.g. Stockbuilding eats into working capital). Firms doing

everything they can may still be insufficient to protect against hard Brexit.