Carney's questionable commitment to rate cuts

WHEN the theatre is burning, it is generally a bad idea for the head of the fire department not only to shout "Fire!", but also to say that he intends to fan the flames when the fire gets worse.

Yet, that is precisely what Mark Carney, the governor of the Bank of England, appears to have done in the immediate aftermath of the UK's vote to leave the European Union. In a speech last Thursday, he indicated that he expects the UK economy to weaken substantially in the near term, and that the Bank of England stands ready to cut interest rates to correct matters.

Before Mr Carney's remarks, the markets had all too many reasons to fear a full-blown sterling crisis later this summer. The UK chose to have its divisive EU referendum at the very time the country was experiencing an external current account deficit of 7 per cent of GDP, the largest in post-war history.