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BoE mired in a pea-souper

Like a ship seeking the reassuring beam of a lighthouse through the fog of economic data, the Bank of England has been forced to work with as much as it can see ahead of the June 23 referendum. So far that suggests there has been some Brexit related impact on the pound and growth.

And the bank, reassuringly for Chancellor George Osborne's cause, doesn't like what it's seeing. The bank has given its starkest warning so far in this report: "A vote to leave the EU could materially alter the outlook for output and inflation, and therefore appropriate setting of monetary policy."

Mark Carney, governor of the Bank of England, at the bank's quarterly inflation report news conference in London, on Wednesday, Aug. 13, 2014.
Simon Dawson | Bloomberg | Getty Images
Mark Carney, governor of the Bank of England, at the bank's quarterly inflation report news conference in London, on Wednesday, Aug. 13, 2014.

As a result the bank has lowered the near term growth outlook and decided to keep interest rates at 0.5 percent.

But if you only want cold hard facts then stop reading here. That's the main outcome of this Super Thursday meeting that you can take to the er....bank.

Otherwise the Inflation, Growth and Rate setting conclusions from this meeting are so full of Brexit related caveats a lawyer would struggle to sign off on any of the economic projections.

I quote: "The referendum on U.K. membership....poses a number of risks to the outlook for U.K. activity, inflation and financial stability". They might have also added - and also risks to forecasts!

The bank thinks at least half of the 9 percent fall in sterling since November could be down to Brexit uncertainty. But that's a guess.

It also believes growth will be 0.2 percent lower in the second quarter of 2016 in part because households are not reducing their savings, or not spending more, due to Brexit worries. Again this is a "wet finger in the air to see which way the wind is blowing" moment.

And right now that is as good as it gets because even the foresighted economic gurus in the bank's bomb-proof underground meeting rooms cannot pre-judge the outcome of a Brexit vote.

Reassuringly the bank has said it will take whatever action it needs to ensure inflation expectations are well anchored regardless of which way the vote goes.

Perhaps I shouldn't characterize the bank as the ship in the fog then, but the lifeboat ready to try to rescue the economy should it founder on the Brexit-related rocks.

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