BoE's Tenreyro: Final shape Brexit takes could have significant effect on economy

Below are key takeaways from the report delivered to the Parliament's Treasury Select Committee by Professor Silvana Tenreyro, an external member of the Bank of England's Monetary Policy Committee.

• Domestic inflationary pressures had been weaker, which suggested to me that the output gap remained in negative territory.
• Although I continue to see upside risks to the MPC’s 1% forecast for potential productivity growth, I share the committee’s modal forecast for weaker supply growth than we were used to pre-crisis. 
• Brexit aside, while my central forecast is that inflation will remain slightly above target.
• I think there are some downside risks; in particular, core services inflation might remain soft and unit labour costs might end up below our central forecast (either because pay does not grow as quickly as I expect, or because productivity recovers more strongly). 
• As of now, I think it is prudent to let the effect of the last move sink in and continue monitoring the evolution of the economy.
• Going forward, how much further tightening is needed will depend on whether the economy evolves as in our forecast.
• The final shape Brexit takes could have a significant effect on the path of the economy.
• The appropriate monetary policy response to Brexit will depend on the reaction of households, companies and financial markets.