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Carney tells banks to prepare for rate cut in event of Brexit

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The Bank of England is expected to warn of cuts to inflation and interest rates if the UK votes to leave the European Union on 23 June.

The Sunday Times reports the central bank has already asked other institutions to prepare for a rate cut, ahead of setting out the economic implications of a Brexit vote in its inflation report later this week.

One bank chief executive told the newspaper he had been invited to Threadneedle Street for an informal discussion and was told to check whether the bank’s balance sheet could withstand an interest rate cut.

Bank of England governor Mark Carney has previously warned Brexit represents the biggest risk to UK growth.

Elsewhere, Chancellor George Osborne has argued leaving the EU would make mortgages more expensive and significantly impact house prices.

Appearing on ITV’s Peston on Sunday, ahead of the publication of Treasury research about the cost of Brexit, Osborne said: “I’m pretty clear that there will be a significant hit to the value of people’s homes and to the costs of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU.”

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