ECB Unfazed by Brexit | Macro Minutes

  • Thursday, June 30, 2016

Brexit may have shocked the markets…but not central banks.

In the wake of the vote, the European Central Bank (ECB) has been the picture of stability: its communications over the last 10 days have averaged an almost perfectly neutral 0.08. 

6.230.16 Prattle Infographic_ECB

That’s not to say there haven’t been a few notable highs and lows. The ECB press release that followed the vote was one such dip, but it was countered by a more hawkish speech on inflation by Draghi.

Emphasizing the resilience of the British economy, the Bank of England (BOE) has been equally unflinching of late. Mark Carney’s June 30th speech echoed this narrative, while also indicating that a round of stimulus may be necessary to mitigate the shocks caused by looser ties to the EU. Carney’s move toward stimulus is telling, as it appears the BOE–and the British economy as whole–have more questions to answer than the ECB in a post-referendum world.

Bottom line: With Britain facing sudden instability and Europe looking comparatively stable, the BOE and the ECB are dealing with distinctly different situations.

The Signal Team

click here to subscribe to the signal blog