UK central bank warns pound to suffer from Brexit

LONDON

Pound sterling is likely to fall “sharply” if Britain votes to exit the European Union next week, the U.K. central bank has warned.

The Bank of England’s Monetary Policy Committee said on Thursday that Brexit could “materially” affect output and inflation in the U.K. economy, with households deferring consumption and firms delaying investment.

“There are also risks of adverse spillovers to the global economy,” it said, adding: “Sterling is also likely to depreciate further, perhaps sharply.”

The committee, which meets once a month to set interest rates, also agreed to hold Britain’s benchmark interest rate at a record low of 0.5 percent, where it has been for more than seven years.

But Vote Leave, the pro-Brexit campaign group, said the Bank was breaking election rules that ban public bodies from activity that could be perceived as biased.

Bernard Jenkin, a lawmaker and Vote Leave director, told Bank of England Governor Mark Carney in a letter earlier this week that he was “prohibited from making any public comment or doing anything which could be construed as taking part in the referendum debate.”

But in a harshly-worded response, Carney told Jenkin he had not “made my views known” on the referendum.

He continued: “Nor do I intend to share my private opinion other than via that anonymity of the ballot box when I join millions of others to cast my vote.

“All of the public comments that I, and other bank officials, have made regarding issues related to the referendum have been limited to factors that affect the bank’s statutory responsibilities and have been entirely consistent with our remits.”

The Bank of England’s warning came hours after the Swiss National Bank warned “the imminent U.K. referendum on whether to stay in the European Union may cause uncertainty and turbulence to increase.”

Britain’s EU membership referendum takes place next Thursday, June 23.