We may even be able to weigh up political parties’ manifestos and estimate some of the economic consequences of their coming to power. But fundamentally, we know little about how consumers and firms will react to political developments, and especially to the types of seismic political change that are macroeconomically relevant. Indeed, for such events to be considered a risk they are usually unprecedented.
Fiscal policy remains supportive of a non-inflationary expansion in economic growth. The Bank will continue to build its foreign exchange reserves, and purchase foreign currency at opportune times in a manner that does not destabilise the financial markets.