The Bank of England can’t remain in its ‘Brexit’ parallel universe forever

House prices are in freefall. Unemployment is rising relentlessly. The pound is plunging on the markets, and companies are re-locating to Paris and Frankfurt in droves. In the parallel universe Mark Carney increasingly seems to live in, that is a pretty accurate description of the British economy. In this universe, however, the picture is very different. The economy is doing just fine – and that is making it increasingly hard to understand why interest rates are being held at ‘emergency’ levels to cope with the ‘catastrophe’ of leaving the European Union.

At a meeting of the Monetary Policy Committee yesterday, the Bank left rates on hold at 0.25 percent, while hinting that might finally go up next month. In the aftermath of the referendum, it cut rates down to that level, to cope with the shock of leaving.