The IMF appears set on making sure the exuberance in stocks is not mistaken for any reflection on optimism. Having warned of the systemic fragility due to Deutsche Bank, Madame Lagarde's pre-Brexit fearmongering has now been confirmed post-Brexit as IMF spokesman Gerry Rice warns the near-term risks from U.K. vote to leave the European Union "arising mainly from the macroeconomic and financial market impact of a sizable increase in uncertainty," including on political front.
In April, The IMF warned...
A British exit from the European Union would pose “serious downside risks” to an already slowing global economy, the head of the International Monetary Fund said Thursday.
“We have clearly elevated (so-called) Brexit as more of a serious downside risk to our forecast for global growth,” IMF Managing Director Christine Lagarde told reporters at the outset of the IMF and World Bank spring meetings attended by central bankers and finance ministers from 189 countries.
And now, as Bloomberg reports,
“Brexit has created significant uncertainty and we believe this is likely to dampen growth in the near term, particularly in the U.K. but with repercussions also for Europe and the global economy. Prolonged periods of uncertainty and associated declines in consumer and business confidence would mean even lower growth”
“One notable source of this uncertainty concerns the terms of the future relationship between the U.K. and the EU, and these relate to questions about how long it will take to decide those terms, how the how the new relationship will impact business and other actors”
IMF will release updated version of World Economic Outlook on July 19 which will reflect its assessment of the Brexit impact.
“The IMF strongly supports the commitments made and the steps taken by major central banks, that includes the Bank of England, the European Central Bank, the U.S. Fed, the Bank of Japan and others, to provide liquidity and curtail excess financial volatility.”
“Market movements immediately following the referendum were large but not excessively disorderly.”
“More broadly, we think policy makers need to stand ready to act should the impact of financial market turbulence and higher uncertainty threaten to materially weaken the global outlook.”
“Decisive policies will make a difference.”
Says “the fund will continue to monitor developments closely and we are engaging with our members to maintain global stability in the period ahead. We also stand ready to provide support to our members as needed."
So - to summarize - The EU is going to suffer... as is The UK... but central banks will save the world so don't worry too much.
Finally, when asked about George Soros more dire comments, Rice urges against “rush to judgment” on Brexit impact.