Live coverage as head of City regulator chosen to lead at Threadneedle Street
- Full story: Andrew Bailey appointed head of Bank of England
- Mark Carney’s term in office extended – but only for six weeks
- Third-quarter UK GDP growth revised up to 0.4%; business investment flat
- UK consumer confidence increases with better long-term prospects expected
For anyone worried that a near-term rate cut might overstimulate the economy, or get us closer to the point where lowering rates becomes futile, Haskel has a simple solution: just reverse the car and raise ‘em:
The insurance might be quite cheap. Even if it turns out that the policy-maker has overstated the probability of ending up at the ELB [effective lower bound interest rate*] , we can undo the stimulus by raising interest rates, given the much larger policy space we have available in terms of tighter policy.
In this sense, I believe the costs of reversing policy would be quite low as expectations are unlikely to be de-anchored from looser monetary policy after so many years of ‘lower for longer’.
One of Andrew Bailey’s new colleagues has been speaking on the economy, at an event at the aforementioned Resolution Foundation in London.
Jonathan Haskel, who is one of the nine members of the monetary policy committee, has argued that the Bank of England should cut interest rates now. The MPC otherwise risks seeing the UK economy slow to a point where the central bank has few tools to help.
The economic outlook for the UK has weakened during the last year: Brexit uncertainties have weighed on the economy and the world’s economic outlook has deteriorated. Inflation is low and projected to stay low. Thus, I believe current data justifies looser monetary policy
Looking forward, I believe that downside risks are lingering over our forecast. In particular, Brexit uncertainties may remain entrenched. Brexit is a process not an event.