ECN | 13 July 2016
Wait…now Brexit will have zero impact on the United States economy and stock market? Yep. Those are the words of one Federal Reserve official, which is interesting considering that Fed Chair Janet Yellen warned of “significant economic repercussions” just prior to the referendum.
Federal Reserve Bank of St. Louis President James Bullard told an audience in St. Louis that the United Kingdom’s decision to leave the European Union last month would have “close to zero” impact on the U.S.
“Now that the markets have had some chance to digest the move, I think the ultimate impact on the U.S. economy will be close to zero,” Bullard told reporters Tuesday.
Bullard added that the Brexit shock is the reason for the considerable historic decline in U.S. bond yields (SEE: U.S. 10-year bond falls to record low yield of 1.36%) rather than a negative outlook on the U.S. economy.
“Wall Street has taken that as a signal that growth is slowing” in the U.S., he said. “I think it’s a flight to safety. I would not take it as a signal of U.S. growth prospects.”
Here is what Yellen told Congress in her semi-annual monetary policy report just prior to the Brexit referendum:
“I am simply saying the decision could have economic consequences that would be relevant to the U.S. economic outlook… There is uncertainty but this is a unique event that has no close parallel. It’s hard to know what the consequences would be — of course there is always uncertainty both domestically and globally, we operate in an uncertain environment…We will closely monitor what the economic consequences would be and are prepared to act in light of that assessment.”
Britain got its independence, the markets have recovered any and all losses and the destructive institution known as the European Union continues to crumble.