Running the Numbers for a No-Deal Brexit on BOE Policy

(Bloomberg) -- It seems likely that Boris Johnson will become Britain’s next prime minister, taking the country closer than ever to crashing out of the European Union without a deal. Such a scenario would likely see the Bank of England navigate a similar trade-off to the one it dealt with in the aftermath of the June 2016 referendum: Inflation would surge, but any shock to demand would likely be bigger than the impact on supply. Bloomberg Economics would expect the Monetary Policy Committee to respond by easing policy, perhaps lowering rates to almost zero, which is its estimate of the lower bound.

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