Outlook for US and Europe has not changed fundamentally, Carney says

Advanced economies in Europe and the US have not been derailed by the wave of volatility that has washed over commodities and financial markets recently, the Governor of the Bank of England told a newspaper on Friday.

Their banking systems continued to be “well-capitalised” and the outlook was for a slow but steady pace of expansion, Mark Carney told The Wall Street Journal.

“It is a pretty modest world. Recent events are just reinforcing that. I don’t think they have fundamentally changed that trajectory,” the BoE’s chief told the journal on the sidelines of the World Economic Forum in Davos.

Recent events in markets weren’t a sure sign of changes in the fundamental prospects for those economies.

“Downside risks are still there to emerging economies, but I don’t think we’ve learned anything dramatically new that brings us to another level down in terms of the pace of emerging market growth,” he said.

“The UK economy is still tracking quite well and the underlying fundamentals are solid. This isn’t a debt-fuelled recovery. People are consuming out of income. Consumer confidence is at the highest level in a decade and investment confidence is right up there.”