Skip to main content

Mark Carney, Governor of the Bank of England (BOE) speaks at the Council on Foreign Relations in New York, U.S..

MIKE SEGAR/Reuters

The recent drop in long-term bond yields below shorter ones in key sovereign bond markets is not “a vote of confidence” in the economic outlook, the head of the Bank of England said on Tuesday.

While it is easier now to invert developed countries’ yield curves than it had been previously, it is still no positive signal for the economy, Bank of England Governor Mark Carney said at an event in New York.

Yield curves in the United States and Britain inverted for a while in the last month. In the U.S. case, the phenomenon has stood as a reliable precursor to economic recession, although its track record is less consistent elsewhere.

Story continues below advertisement

Mr. Carney, speaking a day after the British Parliament blocked Prime Minister Boris Johnson’s latest bid for early elections there amid the continuing Brexit standoff, also said business investment in Britain is tracking at a 25-per-cent slower pace than it was before the 2016 Brexit referendum.

The central bank official also spoke about the extent to which Brexit could affect the British economy, adding that he would expect inflation to rise and growth to slow if Britain departs from the European Union without a deal. Mr. Carney said that the pound is more volatile and said the economic impact will depend on the final terms of Brexit.

“Sterling volatility, as you would know, is at emerging market levels and it’s decoupled from other advanced economy pairs for obvious reasons,” he said. “Financial markets are going to move substantially one way or another depending on the outcome.”

The pound experienced wide swings over the past there months but volatility has come off recent highs amid diminished chances of there being a no-deal Brexit on Oct. 31.

This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter